There's More to This Rally Than Greece
Posted at 1:26 p.m. EDT on Wednesday, June 10, 2015
So that's all it takes, huh? A better tone between Germany and Greece? Some sense that this monstrous Greek issue can be put behind us?
On the surface, absolutely. But, to me, this is really about growth. For example, the move in bonds in Europe, where yields are just screaming higher, is a sign that business is getting better throughout the continent.
It makes sense. While energy prices are still low, they aren't so low that we sense a recession coming on, and Europe's benefiting mightily from its non-oil-producing status.
We've had a heating up of hatred in Russia, but have you noticed this issue has somehow become much less front-and-center vs. last year? I think there's more confidence on that issue, which is being greeted quietly but enthusiastically. It didn't hurt to see General Electric (GE) announce a 16-year service pact from a Russian energy company. I can't even imagine that kind of deal happening a year ago.
Then there's China. Now, we've all been disappointed by China's slowing of growth in the last year. But this morning Vale (VALE), the big Brazilian mining company, said it expects iron ore to tighten because China is buying more and producing less. This is very big news given how the iron market's been a terrific tell of the continuing slowdown.