Greece, ECB and US Regulators all Making Headlines...

Stocks showed a complete lack of direction yesterday – but despite this – the Dow notched another new high yet again while the S&P and Nasdaq ended the day flat. Lack of clarity and now new concern over Fed policy once again held the mkt in check.

Yesterday brought us a great surprise – Good news for housing…..(finally)……Housing Starts jumped by 20% coming in at an annual rate of 1.13 mil homes – vs. the 1.02 mil that we expected! And building permits? Jumped 10%......This definitely caught the mkt and the naysayers by surprise – so now what? So many questions – so little time to answer them……. Should the mkt embrace that news? Should investors be concerned about that news? Is good news really good news? Does this ONE housing report negate all of the other weaker macro data points? Will the Fed surprise the mkts and investors with a rate hike? Clearly not – which is why the mkt did not know what to do – so it did nothing really – other than try to digest Monday’s breakout……

Today brings us the all important FOMC mins – released at 2 pm……but is the mkt really sitting on the edge of its seat awaiting these mins? Absolutely not…..the mins are sure to sound ‘dovish’ – and we already know that – the mkt has already discounted that………..But Janet's speech on Friday may be another story..... Will she say anything remotely hawkish after that 'strong' housing starts number. By Friday - she will also get a chance to take a look at Existing Home Sales - which are due out tomorrow - will those be as strong? Expectations are for 5.23 mil.....or a 0.8% gain M/M..... If not – how do we reconcile the two? How can you say that the consumer is confident if we get divergent numbers on the housing mkt?

Now remember – Housing starts represent new homes.......and the builders are all about new homes....thus the rally in those names yesterday... and remember........Builders love to and in fact handle the complete transaction when they snag you...... – meaning they sell you the lot, build you the house and FINANCE the mortgage - they take the bank out of the equation...... because they want to SELL you the house……They make it easy……5% down, or 10% down....much less than what the bank now requires.....

Existing home sales have a host of other factors to deal with.......they are dependent on the condition of the home, recent sales in the neighborhood, title insurance, inspections, any liens, age of roof, windows and mechanicals and the willingness of a bank to lend you the money……..and as we know – the banks which were all saved by the US Gov’t don’t want to lend out ‘the money’ – they want to save it for a rainy day…..and that is BS! If it was not for the US gov’t – those banks would be like Greece – circling the drain… (That’s a whole other story).

US futures are flat this morning and European mkts are under a bit of pressure....- but not falling out of bed by any means......Greece continues to hold the mkts hostage - paralyzing them really because it is 'the fear of the unknown'......No one really knows what happens if Greece implodes....we can all speculate - but this would be a virginal event......No country has yet defaulted on or exited the Eurozone.....so caution is the word.

A Bloomberg article highlights the pressure that Uncle Mario (Draghi) and the ECB are under as they continue to discuss the next move -

"The ECB's in a Tight Spot Over Greece" and it goes onto say:

European Central Bank policy makers will discuss Greek bank aid on Wednesday in a chore that is getting more uncomfortable every week.

The Governing Council will meet in Frankfurt to debate whether to tighten rules on Greek access to Emergency Liquidity Assistance as the country veers toward default. Officials are well aware their decision could worsen the political crisis just as bailout talks show signs of progress.

ECB President Mario Draghi has repeatedly said politicians rather than unelected central bankers must decide on the country’s future, and council decisions will be based on rules such as the solvency of Greek banks and a prohibition on state financing.

“It’s very simple: the ECB doesn’t want to be the one that pulls the plug on Greece when political negotiations are still ongoing,” said Marco Valli, an economist at UniCredit SpA in Milan. “As long as there is the chance that Greece will remain solvent, that it might receive further European Union aid, then ELA can be given. Should this possibility disappear, then it will have to stop.”

I do not expect the mkts to make a major move either way - until now there is some finality or closure to the Greek situation. Although consensus is that a Grexit would not bring down the Eurozone - investors will remain cautious until the final bell rings.....

On another note - the WSJ runs with an interesting article today -

"Regulators Point to Risks from Rapid Fire Trading, Clearing... Report highlights how technology and regulations are changing the way markets function, potentially creating vulnerabilities"

You don't say?

'The rise of computerized trading and the changing roles of big banks are reshaping financial markets and potentially raising new vulnerabilities, U.S. regulators said in their annual report on financial-system threats......

The concerns about market structure and what are known as central counterparties were new to the council’s annual report, the fifth since the body was formed by the 2010 Dodd-Frank law, and they reflected officials’ focus on how technology and regulations are changing the functions and vulnerabilities of financial markets.

Ms. Yellen and other regulators said they were aware of concerns among market participants that liquidity, or the ability of investors to buy and sell securities quickly, could deteriorate in today’s markets, given changes like the rise of electronic trading and new regulations that affect banks’ willingness to buy and sell securities.

And the kicker -

The oversight council also cited the rise of rapid-fire electronic trading as a potentially destabilizing factor, saying it has tied disparate parts of financial markets more closely to one another, “possibly amplifying price movements in periods of market stress.” More broadly, SEC Chairman Mary Jo White has expressed concern that the complex, fragmented nature of financial markets can fuel instability.'

Well isn't that a kick in the pants?????? Fragmented nature of financial markets can fuel instability.......Who would've thought?

Risotto w/Fresh Fava Beans and Pancetta

Risotto is always an easy meal and is good for those who are vegetarians and or need to be gluten free. This one celebrates the spring with fresh fava beans enhanced with pancetta. – Truly a great dish.

For this you will need: Butter, Olive Oil, Finely Chopped Onion, Finely Chopped Pancetta, Arborio Rice, White Wine, 6 Cups Vegetable or Chicken Broth, Fresh Shelled Fava Beans, Chopped Parsley, Grated Pecorino Romano Cheese.

Begin by heating the butter and olive oil in a heavy saucepan. Add the onions and cook until translucent. Add the pancetta and sauté for 3 or 4 mins…. Add the rice and stir until it is well coated. Next add the wine, and stir continually over medium heat until it is absorbed. Once absorbed add in a ladle of hot broth – stirring constantly until absorbed…Repeat - adding ladles full of hot broth, and stirring continuously. About 10 minutes into the cooking time, add the fava beans and continue adding broth and cooking. You want the rice to be firm to the bite – but not hard. Remove from the heat, add another dollop of butter and the pecorino cheese. Serve in warmed bowls and enjoy with your favorite white wine.


Buon Appetito.