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By Jason Stipp and Jeremy Glaser | 02-27-2015 06:00 AM

Friday Five: Fed Aims for Normalcy, Greece Buys Some Time

Subdued inflation complicates the Fed's path to normalization. Plus, a 'Grexit' forestalled, HP wobbles, and home-improvement retailers shine.

Jason Stipp: I'm Jason Stipp for Morningstar, and welcome to The Friday Five: Morningstar's take on five stories in the market this week. Joining me with The Friday Five is Morningstar markets editor Jeremy Glaser.

Jeremy, thanks for being here.

Jeremy Glaser: You're welcome, Jason.

Stipp: Up first this week, Greece was in the headlines again, but it may be the last time we talk about Greece for a little while anyway?

Glaser: They did buy themselves a little bit of breathing room.

Last week, on Friday, they came to an agreement to extend their bailout by four months, and this week the Troika, the lenders, agreed to that deal after Greece provided a list of potential reforms that they are going to after. In order to get this extension, Greece basically had to back away from a lot of their earlier demands to make big changes to the austerity programs and reforms they have been asked to do under the existing agreement.

This just sets the stage for more negotiations. We are nowhere close to a long-term agreement. This is still very much kicking the can down the road. It fits with our thesis on this situation, which is that there will be a lot of noise, but not necessarily any catastrophic results, and in the end, Greece will acquiesce to the terms of the lenders, and the lenders will give maybe just enough in order to keep everyone happy and keep Greece in the eurozone. Although they are willing to let it happen if they get pushed too far, it's probably not ideal for anyone for Greece to leave the eurozone, and we very much saw that in play this week.

We are going to see a lot of these headlines play out again four months from now as we worry about this and what the implications could be. And yes, I think there still is a tail risk that you could see a Greek exit, that it could have some sort of systemic impact, but it seems the likelihood of that continues to shrink, and investors should really keep that perspective in mind when we are talking about this again in a few months.

Stipp: Although inflation data this week would seem to indicate the Fed has a lot of breathing room, testimony from Janet Yellen also shows they are still thinking about raising those rates.

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