Is Merkel Softening Her Stance?

The markets are higher again in early trading on little new news.  Asian markets were mixed to higher overnight.  The Res. Bank of Australia held its key rate steady at 3.50% and also said that while growth in China has moderated it does not appear to be slowing further.

European markets are higher this morning despite a terrible GDP number out of Italy (-2.5%).  Spain and Italy are up the most, and Spanish bond yields have eased back to 6.71%.

There are also comments out of Germany this morning that Merkel may be softening her hard stance on the ECB's bond buying program.  This would be a surprise.  And its not just Merkel, but the Bundestag that has reiterated its stiff opposition to shared liabilities at each and every turn of this saga.  So we will have to watch for more commentary that either confirms or refutes these rumors.

Stocks rising on earnings: CHK, FOSL, BSFT, TDG

Stocks falling on earnings: CVS, FE, TAP, CHD

The dollar is lower vs. the euro today.  Gold prices are flattish near $1615 and oil prices are higher to $93.25.  Silver and copper prices are higher as well. 

The 10-year yield is getting another boost to a 1-month high at 1.63%.  And the VIX is down again to 15.75, which is pretty near recent lows from which it has bounced.

Trading comment: The market continues to stairstep higher.  Volume has been on the lighter side due to the fact that we are in the thick of summer trading.  But don't rule out the prospect of performance anxiety setting in and pressuring portfolio managers to chase the market higher.  I have seen reports that more active managers are trailing their benchmarks this year than ever.  That's not a good feeling for portfolio managers and could result in near-term dips being bought fairly quickly as they look to keep up.

KAM Advisors has long positions in FE