Greece Default Worries

Something popped out at me today as the Greece default worries weigh on the equity market.  The euro is substantially higher as the equity market goes lower.  This tells me one thing:  The dollar is a risk on currency right now.  In other words, the long dollar, short euro, long equities trade is a heavy part of fast money portfolios.  Oddly enough, the Chinese market soared today, the A Shares went up 2.7%, and the A Shares futures is hardly flinching on this European market selloff.

Today is a mini-preview of how the market will react when you get a risk off day.  The equities obviously will be lower, with the European indices taking the biggest hit, followed by Japan and then finally the US.  The emerging markets are so underweight that they will hardly flinch unless things get really panicky.  And the main thing:  the dollar will likely be weaker, not stronger.

Greece doesn't really matter, but it is like a little midget hurdle that the market will jump over and congratulate itself for getting past the Greek default/exit issue.  In reality, the dip on a Greek default would be a buying opportunity, because there will be no collateral damage since would get rid of a so-called "bear catalyst".  Not that it would be much of a dip, since there would be no fundamental effect on the financial markets.  Greece is a giant red herring covering up what the core problem of equities are:  overvalued and overowned.