Global equities have traded higher despite the continued threat of debt default in Greece and the likely implications for Europe and the global economy.  Instead investors have attributed greater weight to more positive macro data.  Chinese manufacturing numbers rose in January.  The US economy created 243,000 new jobs in January, the largest increase since April 2011, while the unemployment rate dropped down to 8.3%.  Q4 earnings season is progressing well, 60.9% of S&P500 Index companies reported positive earnings surprises. 

Although Greece is back in the headlines this morning, markets have lately been reacting with less volatility than during the period prior to year-end as investors appear to have come to terms with the negative implications of a Greek default.  March 20th is the next key date, the redemption day for 14.5 billion Euros of Greek Sovereign debt.

Another geopolitical risk threatening the market’s uptrend is increasing tension around Iran’s nuclear build-up; potential conflict in the region heightens the risk of a price spike in crude oil which would be a drag on economic growth, profit margins, and consumer spending.

That said, the US market has rallied almost 20% off its lows in early October and is vulnerable to a short term pullback. Accordingly, there is a need to be even more selective and tactical over the next few weeks, while the market works off the overbought conditions.  An extended period of low interest rates, which will lead to further U.S. dollar weakness and indicates sustained sub-par economic growth, is supportive for investments in gold bullion. 

The expectation is for continued market volatility which further supports the need for a balanced portfolio, enhancing returns via income and the need to be more tactical.