Monday Morning Musings

The markets are lower in early trading, after a failure to make any progress on the U.S. debt ceiling issue. While that is certainly being cited, a bigger issue might be another downgrade of Greek debt by Moody's, and saying that a Greek default was all but certain.

That has put the flight to safety trade back on so far today. Gold prices are hitting new records above $1615, and the Swiss franc is also trading at record levels.

The bond market does not at all seem worried about the debt ceiling, as the 10-year bond trades calmly with the yield barely higher to 2.98% after failing to get through the 3.00% level.

Corporate earnings have continued to come in at a healthy clip, and the markets were nicely higher last week.

Commodities are mostly lower so far today. Oil prices are down near $99.25. And ag prices are lower across the board.

The VIX is up 9.7% today to 19.22, still below the 20 level.

Trading comment: Despite the early pullback this morning, the market continues to hang in pretty well. It doesn't look like the market is overly concerned with the debt ceiling issue. The major averages continue to trade above their 50-day averages; the 10-year yield remains below 3.00%; and the volatility index is trading below the 20 level, signaling option investors aren't predicting a big pickup in volatility near-term. I think the debt ceiling issue is proving to be a head fake and diverting attention from strong corporate earnings. I agree with those who have said if there is some sort of market dislocation relative to the debt ceiling issue, I think it would be a short-term political event, and a buying opportunity for stocks.