Despite a down opening for markets, Apple’s massive earnings caused quite a roar. The S&P 500 jumped 0.87% while the NASDAQ had a big gain of 1.14% as Apple roared ahead due to stellar earnings. However, the same optimism wasn’t echoed by Europe and Asia.

Furthermore, the Euro rose to $1.31 against the dollar while the 10-year Treasury fell down to 2.01%. Also, gold crossed above the $1,700 mark.

The Fed’s announcement of prolonged low rates appeared to be the big boost for equity ETFs. The possibility of QE3 might serve to establish an equity rally along the lines of QE1 and QE2. Yet, I only see this decision as a confirmation that the U.S. economic outlook is far from rosy, which might bring the bear market back into play at some point.

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Major market ETFs hovered near the zero mark once again as Greece remains in a deadlock with its creditors. The S&P 500 marginally dipped 0.10% while European indices were down as well.

Also, the Euro stood still at $1.30/Euro while the 10-year Treasury was virtually unchanged at 2.06%. Overall, the last couple weeks have presented an entry point to gain selective equity ETF exposure but markets haven’t moved significantly since.

While Eurozone risks still guide our low risk strategy, other investors seem to be regaining some of their appetite. The VIX has now broken under 20, showing that volatility has substantially subsided in the last month. Nevertheless, the grander picture of a strained global economy suggests market volatility can ramp back up.

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As we wait for a resolution between Greece and its bondholders, markets stood flat as the S&P 500 chimed in a meager 0.05%. Meanwhile, the 10-year Treasury climbed to a yield of 2.07%, indicating that investors are less risk averse than they have been in recent weeks.

For the first time in over two weeks, the Euro has broken above the $1.30/Euro level. However, a negative outcome in Greece can quickly send the Euro back down.

As crunch time approaches in Greece, European leaders and the IMF among others are putting pressure on bondholders to accept a haircut. Lest we forget, even a 50% haircut would only reduce Greece’s debt-to-GDP to 120%, which is still unsustainable. A restructuring deal will only delay the likely inevitable default.

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