Sometimes we are too focused on just the S&P 500. When you look at Europe, it is back to being a laggard. Dax has dropped 10% from high to low from last Thursday to yesterday. Eurostoxx 50 at over 10% drop. S&P dropped just 80 points, or about 6% from high to low. Europe seems to be a leading indicator for the S&P, when it lags, it signals trouble ahead. It has been lagging the S&P for the last 2 weeks, and the market finally cracked.
Enough with the Greece charades. They should just pull the plug on the pig. Euthanize it instead of trying to save Greece. It isn't worth saving. When they do finally let Greece go bankrupt, Europe will probably be able to rally for 6 months nonstop.
Expecting a dip and run today. Buy the dip, we are oversold.
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Saving Greece is not charity. European banks have > trillion euros invested in greek bonds. This has everything to do with the open positions of the ruling class and nothing about Greek welfare.
Maybe just the opposite of your expectation. Rip first, then sell.
You can put lipstick on a PIIG, it is still a PIIG. Greek bonds are worthless. No one will buy them unless they guarantee them, which effectively makes them euro bonds, which they will not do. Contagion is bogus. It is a vague term used by market strategists that put Italy and Spain in the same basket as Greece. Totally different situations, and Italy is solvent.
Italian banks have huge unrealized losses as do the French, the Spanish, the Irish.. but guess what, they're not losses until they're closed out. Mark to market accounting need not apply (again). They're all screwed. This isn't contagion. Lest not forget how this Greece thing even started. It started cos Greek banks were leveraged up the as* on US MBS to fund pension and social welfare.
MF Global has proved once again that there's no such thing as transparency in world of finance until the end.
US banks have huge unrealized losses. So do Chinese banks. All banks are zombies in bailout nation. They get their bailouts made to order and on time delivery.
These bailouts at cost to common man taxpayer allow banks and the ruling class to hold their positions with the hope that inflation will push their holdings up over the course of 20-30 years. Versus a reset option which purges system and allows growth, but the ruling class would go bankrupt. Case in point Japan.. who are still underwater even after 20 years. . Expect big taxes where banks hold trillions in derivative contracts. Some would call that communism.
this is why the fed is so hellbent on fighting deflation. their primary goal isn't job creation. it's asset price support.
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