Greek Coffee Percolates As The World Yawns

In the run-up to default, Greek government negotiators kept hoping they could pull to an inside straight, the hardest hand in poker to nab. They’ve been surprised at every turn at how hard-nosed the French, Germans and others have played their hands, too.

Now the unimaginable has happened and guess what? The financial world didn’t fall apart. In fact, it seems to be humming along quite nicely without the Greeks. They’re now stuck in no man’s land, standing outside looking in the café window while the rest of the developed world sips its coffee and yawns, trying to wake up from a tiresome ordeal. Everyone is puzzling over the bad behavior by the Greeks.

The euro dipped a bit today, which is understandable because no matter what else goes on, the ECB’s quantitative easing is still in gear and the promise of a rate rise by the U.S. Federal Reserve remains much more than a mere possibility.

Equities popped up in the U.S. and in Europe, with the German DAX and French CAC emerging as the biggest winners. American stocks were quieter than their European cousins, but nevertheless showed some strength.

That’s where the “safe money” has gone for the moment.

Crude oil has taken a beating today, a combination of a higher U.S. dollar and an unexpected build in inventories whacking it good and hard. West Texas Intermediate is down over 4% on the day while Brent North Sea is down 2.4%.

Luckily for gold enthusiasts – meaning bulls – oil did not act as much of a drag on the price of the yellow precious metal, which is off around $4.00, all of which can be attributed to dollar strength.

Gold has entered a fourth month of the current range it’s been operating in. There are two ways of looking at this fact. Either gold is going to continue to run up and down roughly $40 to $60, or it will break (most likely downward) in the next month. Barring some sort of catastrophe economically or socially, it is hard to imagine it soaring up and above current resistance.

At this point, we don’t know.

As Tweedledum said in Alice In Wonderland, “Contrariwise, if it was so, it might be; and if it were so, it would be; but as it isn't, it ain't. That's logic.” We’ll have to wait for clearer fundamental indicators.

The S&P, which has good financial company representation in its collective components, is up almost exclusively on banking and investment house robustness due to rising yields. That tells us that the American financial world is optimistic: number one, about Greece, and number two, about prospects for the United States economy.

ADP private employment figures for June came in significantly above what their surveys had projected. That’s about 17,000 more jobs than were anticipated.

Even better for the U.S. economy, many of the jobs were in higher-paying categories. According to the report, professional and business services led the payroll gains with 61,000. Trade, transportation and utilities added 50,000 and construction, 19,000.

One note of pessimism to close, though – the Shanghai stock index was off 5.3% today. Its volatility is becoming a huge issue. If equities markets are an indication of how an economy is doing, China is a certifiable basket case, unsure of its future. “That’s logic.”

Wishing you as always, good trading,