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Market Update ...

The Dow, NASDAQ and S&P 500 are all more than 1.0% lower today. At least for the time being, it appears that our more risk-off strategy was the right call. Then again, let's see if it lasts longer than two days. VIX is up 21% this week.

With Greece's sovereign debt issues driving the market lower, oil and gold are following along. With oil lower, GDP may not be that negatively impacted and gas prices could spike up only close to $5 this summer. But we note that this appears to be a no-win situation, at least for this year. Oil below $105 may be good for the economy, but the lower it goes the more likely it will increase chances of a military conflict with Iran. Morality of wars isn't usually questioned among the 'decision makers'. However, potential economic impacts of wars are always taken seriously. Lower oil prices may reduce short-term economic impact of such a conflict, allowing war hawks to roll out the ground and/or air attacks on Iran. But of course the significant long-term costs associated with such an attack, which mostly the US servicemen and taxpayers will be bearing, are basically swept under the rug, possibly one of those expensive and classic Persian rugs.

Regarding stocks, from a technical standpoint, we note that if the S&P 500 closes below 1342, another 1.0% - 1.5% downside, or 1325, could come within the next few weeks. Of course, any positive jobs data later this week could change all of that.

Lastly, if the market does go through a lengthy correction phase, the Fed could activate its 'insurance' policy, QE3, sooner than later, but unfortunately at a higher premium - higher inflation in the long-run.