U.S. stocks enjoyed another nice session yesterday, just about recouping last week’s losses, on the bet that Greece will pass the austerity measure that’s supposedly the requirement to getting that EU/IMF bailout funding.

In reality, it probably doesn’t matter if the austerity vote passes or not – although it likely will be an ultra-slim margin – because everyone now understands that the EU banking system can’t withstand the risk of technical default (the IMF will hand the money over no matter what).  After that, the market will have to deal with the ultimate issue:  Greece will be unable to pay its obligations for a long time and if the continent fails to find a growth solution then Spitalian debt woes will take the funding problems to another level.

Energy shares shot up to lead the rally.  Consumer staples was the worst-performing sector.

The Dollar Index fell for a second-straight session as it resides at a very low historical level: the greenback is up from even deeper lows hit in early May but still very depressed -- and worse against the Swiss Franc, which is the fiat currency equivalent of gold, as the dollar hit a new low against that currency.

Commodities rallied, led by the prices of sugar, coffee, gasoline and wheat.  Gasoline rallied eight cents to $2.88/gal -- $3.54 at the pump.

The worst Treasury auction ($35B in 5 yrs) in a while had its effect on yields as the longer-end of the curve shot up 10 basis points.  Of course, since yields were at obscenely low levels already it means the 10-year rate sits at only 3.08%.

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U.S. stocks rebounded following three sessions of decline as those concerns over Greek debt, default and the Euro banking system appeared to ease yesterday (the ebb and flow of this issue that we began to talk about a year ago remains ever-present). 

Some optimism arose from word over the weekend that French banks propose rolling 70% of maturing debt into new Greek 30-year bonds – though you’d never know it by watching spreads as the yields on Greek, Irish, Portuguese and Spanish bonds all screamed wider.  The next big test comes tomorrow when that Greek austerity vote takes place.

Tech, consumer discretionary and financials led the rally.  Basic material, consumer staple and health care shares were the biggest losers. 

In a speech yesterday, the president of the Minneapolis Federal Reserve Bank proposed changing the tax system, not for the focused purpose of achieving higher growth rates but to discourage households and institutions from accumulating too much debt.  Really?  That’s his reason for the debt problems we’re currently dealing with?  While tax deductions certainly incentivize people to take on more debt, the sine qua non is low interest rates – specifically, extremely low or even negative real interest rates.   It never ceases to amaze me how the Fed never accepts blame.  Financial bubbles and the ensuing economic disturbance is never a result of their policy decisions. 

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Dannelle Ward was interviewed this weekend on KSDK NewsChannel 5 St. Louis about specialized financial advice for women.

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U.S. stocks slid on Friday to wipe out the gains made early in the week to close down for the seventh of the past eight weeks.  Greece was on the minds of traders again on Friday as we await that crucial austerity vote, scheduled for Wednesday.  The 10-year Treasury rallied again on Friday; its yield isn’t only below 3.00% again but sub-2.90% as it’s settled at 2.87% this morning.

The only of the 10 major industry groups to close higher Friday was utilities.  Energy and tech shares led the losses.  The price of crude is trading at $90.81/bbl right now and wholesale gasoline is down to $2.76/gal.  The national average at the pump is $3.57, which is down from $3.80 a month ago – too bad it’s taken bad news to get the price lower.

This morning U.S. stock futures are a bit higher after most of Asia traded lower last night but Europe is up a little this morning.  That Greek vote will be what everyone will be talking about for the next two days.  The Greek parliament needs a simple majority to pass it and word is there’s no room to spare as the yeas are at 151.  Bailout funds are supposedly contingent on this vote, but they’ll be released even if it goes down in flames because this is more about the European banking system than it is about Greece.  But then if the plan is passed, the country may just go down in flames anyway as an incensed populace takes things to the next level.

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U.S. stocks began yesterday’s session deep in the red after the trifecta of the Fed’s lower growth forecast, factory gauges in Europe’s backbone countries of Germany and France printed contraction and China’s latest measure of factory activity came very close to printing contraction all came together to send futures lower pre-market.  Then investor sentiment took another blow after ECB President Trichet stated the signal of sovereign debt problems threatening the euro-zone banking system is flashing “red,” which was followed by a worse-than-expected jobless claims reading.   All of this hit the market to the tune of more than 200 points down on the Dow Industrials.

But then with about an hour left in the session, news broke that the Greek government agreed to a five-year austerity deal with the EU and IMF.  The news brought in bids to the point that much of the session earlier losses were pared.  Now, Greece must pass this thing and then deal with the big hurdle of piping hot citizens that will likely engage in more strikes and street chaos.

Tech and consumer discretionary (even as jobless claims remain stuck at an unappealing level) were the day’s out-performing sectors.  Energy, financials and consumer staples were the big losers.

The price of crude plunged nearly $4 to $92/bbl (was below $90 before the Greek news hit) as there was a coordinated effort announced to release 60 million bbls of oil from global strategic reserves.  This came a day after news that the Saudis wanted to tighten a noose on the Iranians   Still this is unlikely to have a lasting effect on the price of crude beyond an immediate reaction – the U.S. alone consumes 21 million bbls/day and the world 85 million bbsl/day.  If crude continues to move lower it will be because of the deteriorating growth story (as has been the reason since it peaked at $114/bbl on April 29 (also the stock-market near-term peak).

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Tuesday it was all about G-Pap and that confidence vote in Greece, but yesterday attention turned to Bernanke as Fed meetings are now followed by a Q&A session. 

U.S. stocks bounced between gain and loss for most of the session, then moved into negative territory to stay after the Bernanke press conference – it appears most people came away from the presser and surmised that QE is over.  I contend that the Fed isn’t going anywhere and any obstacles to more QE that currently exist will quickly dissipate after a meaningful slide in stock prices; this market that has become conditioned to backstops will scream for help. 

And there was a hint of more QE, again not now of course but after a spell, and yesterday’s leading sectors illustrated that as energy and basic material shares outperformed.  Although, even these sectors closed down as all of the 10 major groups lost ground.  Utilities and consumer staples took the biggest hit, for a second day in a row.

The CRB index edged lower as the prices of wheat, corn and cotton registered some meaningful declines.  The energy complex held the overall commodity index to just a fractional loss as wholesale gasoline gained nine cents to $2.97 and crude a couple bucks to $95.10/bbl. 

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U.S. stocks rallied yesterday, reflecting some easing regarding European debt/economic concerns and an expectation that Mr. Bernanke will explain monetary policy will remain aggressively accommodative via today’s press conference.

Treasury securities continue to trade at very high prices though (low yields – still below 3% on the 10-yr), so that market remains very negative on growth prospects – part of this Treasury rally is also about an expectation that another round of bond purchases is coming (not in the very near future but following any stock-market weakness) and traders getting in ahead of that buying.

The cyclical led the rally as basic materials, consumer discretionary, tech and energy outperformed.  Consumer staples, utilities and health care were the laggards – staples actually closing lower.

Chinese finance officials again expressed their willingness to support Europe by buying more of their bonds (and I’m sure they are willing as they’d like to have the Europeans even more in their back pocket).  The comments seemed to offset the negative news that a gauge of German economic sentiment sank 12.1 points to a reading of

-9.

And the market’s optimism that G-Pap (Greek Prime Minister George Papandreou) would win a confidence vote last night also gave stocks a lift (the next round of bailout funds were supposedly contingent upon G-Pap winning confidence and the austerity plan his government is supposedly working on).  Of course, the EU/IMF were always going to release funds no matter the outcome, as we’ve already seen the Germans cave on their demands, because this is more a bailout of the EU banking system than of Greece.

So yesterday’s rally was largely about that expectation G-Pap would prevail politically.  However, this morning futures are lower as the problems remain and the Greek citizenry is piping mad because they wanted G-Pap to go – the populace shows zero desire to endure austerity, but such is the case when more than half of your economy has depended on government programs.

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