Market Perspective for January 5, 2015

2015 is starting off much in the same way as 2014 ended. Long-term government bond yields, oil and the euro slumped in the first two days of trading, with the latter two falling to multi-year lows. Oil is back at levels last seen in 2009, while the euro plunged at the open Sunday night and sank to levels last seen in 2006. The drop in the euro came on very low trading volume and and it quickly recovered. Unless the low of $1.186 is broken again in the next few days, it could mark at least a short-term bottom for the currency.

The euro figures to be closely watched in January. Later this month, the European Central Bank will meet, at which time it may launch a quantitative easing program. Traders have been pushing the euro lower because European Central Bank (ECB) President Mario Draghi has been talking up a QE policy, but the ECB also has several members who oppose easy money. Additionally, Greece will hold its election. Anti-austerity Syriza is the frontrunner, with a consistent 4 to 8 percent lead in various polls. Sentiment is generally negative at the moment, which is also weighing on European equities.

Foreign markets will likely overshadow domestic stocks as little economic data is being released and earnings season doesn’t kick off until next week. The release of the Federal Reserve minutes from its last meeting will provide some interesting insight regarding interest rates. The central bank altered some of the language in its last policy statement and these minutes will reveal some of the thinking behind the change.

December truck and auto sales will be out today. If the drop in oil prices is still affecting consumer behavior, we should see an even bigger jump in truck sales following the roughly $20 drop in oil that took place from late November to late December. Look for retail and consumer discretionary to perform well if a big shift in consumer behavior is evidenced by the data.

Eurozone inflation numbers for December will be out on Wednesday. Analysts forecast a decline of 0.1 percent due to lower oil prices. Core CPI, which removes food and energy, is expected to be 0.7 percent.

Earnings season ramps up next week, but there are a few familiar names reporting over the coming days. They include Monsanto (MON), Bed Bath & Beyond (BBBY), Micron Technology (MU), RPM International (RPM) and SUPERVALU (SVU).

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