February 21, 2012 at 09:28 AM EST
Economic Recovery and Market Surprises Continue!
Tuesday, February 21, 2012. 9:25 a.m. Last week’s economic reports continued to surprise, coming in much stronger than the consensus forecasts of economists. They included the Empire State (NY) Mfg Index, new housing starts, retail sales, the inflation reports, the Fed’s Philadelphia area Business Index, along with another sharp decline in unemployment claims to the [...]

Tuesday, February 21, 2012. 9:25 a.m.

Last week’s economic reports continued to surprise, coming in much stronger than the consensus forecasts of economists. They included the Empire State (NY) Mfg Index, new housing starts, retail sales, the inflation reports, the Fed’s Philadelphia area Business Index, along with another sharp decline in unemployment claims to the lowest level since March, 2008.

And the stock market closed Friday at a new high for the rally that began last October, and for the bull market that began in March, 2009.

The Dow and S&P 500 closed fractionally above their levels at the rally top last April 28. That puts them at a four-year high, and almost fully recovered from the most severe bear market since the 1929 crash.

22112a

It’s interesting how closely the chart resembles the market’s initial recovery from the 1929 crash.

22112b

Is Greek Deal a Positive or a Negative?

The Wall Street Journal has an interesting rundown of early opinions regarding what last night’s deal will mean for Greece, the eurozone, and markets. No shortage of fodder for pundits. The list goes like this:

HSBC Bank: The end of the process has been reached and it blows away all the conspiracy theories about a Greek default and/or a euro-zone break up . . .

Barclays Capital: So many hurdles remain. The focus will now be on the implementation of the private-sector involvement and participation rate, which if not enough could lead to a credit event. The details will be resolved over the next few weeks and an orderly Greek default cannot be completely ruled out.

CitiGroup: The majority of the good news does seem already priced in as the outcome was pretty much discussed last week. . . . 

Credit Agricole: Suspects the deal has been priced in and room for further euro appreciation is set to be limited in the short-term. . . .

Credit Suisse: Market response has been pretty muted after a 0.8% rally in Asian hours. Caution is warranted. . .

ING: It looks like a deal, it walks like a deal, it is almost a deal, but the crisis marathon is not over yet. While Greece should be saved, at least for the next couple of months, the feeling of relief is not likely to last for long. . . .

Morgan Stanley: Last night’s agreement was in line with what the market expected. Given that the agreement was priced in by the market, the euro is likely to start running out of steam. There are the implementation risks to worry about and also the political situation in Greece in the run up to the April election. . . . .

BNY Mellon: Greece now faces an austerity program that will not only very likely exacerbate an already severe recession but may very well still leave it requiring an additional bailout in the years ahead. . . .

Capital Economics: In all, if no new hurdles arise (a big if), the latest deal should prevent a disorderly Greek default on March 20 when 14.4 billion euros of debt matures. But with the recession [in Greece] thwarting debt reduction, and public outrage growing, we will still see Greece leaving the euro zone before the year is out.

To read my weekend newspaper column ‘Two Years of Fears Have Disappeared!Click here.

Yesterday in the U.S. Market.

U.S. stock and bond markets were closed for the President’s Day holiday.

Gold closed up $10 an ounce at $1,734 an ounce.

Oil closed up $1.32 a barrel at $102.06 a barrel.

Yesterday in European Markets.

The London FTSE closed up 0.7%. The German DAX closed up 1.5%. France closed up 1.0%.

Asian Markets Were Mostly Higher Last Night.

The DJ Asia-Pacific Index closed down 0.3%.

Among individual markets:

Australia closed up 0.8%. China closed up 0.7%. Hong Kong closed up 0.3%. India closed up 0.8%. Indonesia closed up 0.6%. Japan closed down 0.2%. Malaysia closed up 0.2%. New Zealand closed up 0.7%. South Korea closed down 0.1%. Singapore closed up 0.1%. Taiwan closed down 0.4%. Thailand closed up 0.4%.

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Markets This Morning.

European markets are down some this morning in spite of the Greek bailout agreement last night. The London FTSE is down 0.3%. Germany’s DAX is down 0.7%. France’s CAC is down 0.5%

Oil is up $1.49 a barrel at $104.73.

Gold is up $12 an ounce at $1,747, now up $24 an ounce for the week so far.

This morning in the U.S. Market:

This week is a very light week for potential market-moving economic reports, but they will include Existing Home Sales, New Home Sales, and Consumer Sentiment. To see the full list click here, and look at the left side of the page it takes you to.

There are no important economic reports this morning, other than the EU reaching an agreement on a bailout of Greece last night.

Our Pre-Open Indicators:

Our pre-open indicators are pointing to the Dow being up 40 points or so in the early going this morning.

To read my weekend newspaper column ‘Two Years of Fears Have Disappeared!Click here.

Subscribers to Street Smart Report: The new issue of the newsletter will be available sometime tomorrow (in the subscribers’ area of the Street Smart Report website).

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I’ll be back Thursday morning with the regular Thursday morning post, at 9:25 a.m. eastern time. (This blog appears every Tuesday, Thursday, and Saturday morning!).

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