Monday Morning Recap:

What is important?

1. Greek elections: not unexpected results, however there is some uncertainty going forward as to how Euro area and the Troika will deal with the new "anti-austerity" government.
2. Corporate Earnings: S&P500 Q4 results will continue to be announced. Q4 earning expectations have been lowered, but early on it appears that companies are beating these lowered expectations. The underlying fundamental for equity prices are corporate earnings. Strong earnings should be positive for equity prices, if earnings are above analyst expectations. Financial market participants focus on results each quarter. This is rather a short-term approach for our liking, but important for short-term volatility if expectations are missed.
3. $US: with many countries now trying to lower the value of their currencies to increase export demand and revive their respective economies (Euro area, Japan, Canada), the $US is significantly stronger. This may have negative earnings impact in the longer term for US based global companies and should be considered as a rational for closer scrutiny of US equity weighting allocations.
4. Oil Prices: all the experts, talking heads and wannabe's are trying to call "the bottom", however that is of little consequence. There is structural change happening to the global economy and there will be countries that benefit and those that don't. Remember that if you buy an ETF that is "country" specific, you own a basket of companies that reside in that country. In a global economy, many of those companies will depend on broader markets that range well beyond the borders in which that country is domiciled. Research is important.
5. Bond Prices (and Yields): in May of 2013 all the "experts" predicted US 10 year bond yields were headed to 4% (or thereabouts) and bond market volatility shot up. Investors in fixed income securities ( considered the "safe haven") were shocked by the change in value of their portfolios (to the negative). Bond markets and interest rate sensitive REIT's have been driving fixed income performance significantly so far this year. However, with yet again, record low interest rates with all the central bank stimulus over the last week, volatility in bond markets may be set to rise.