VIX 24.21 -1.19
Dollar Index 80.19 +.05 Aussie Dollar(FXA).8906 +.0145 EURO(FXE)1.3642 -.0064
TLT(20yrGov Bonds) 89.65 -.64 IEF (7-10Gov Bonds)89.76 -.25
XLK (Tech)21.35 +.25 XLE (Oil Index)55.48 +.84 XLF (Finan Index)13.93 +.02 XHB Homebuilders Index)15.74 +.35 GDX (Gold Miners Index)44.01 +1.67 XLB (BasicMatIndex) 30.95 +.44
EEM(Emerging Markets) 38.69 +.75 FXI(China Index) 39.50 +.27 IEV(Europe350)35.71 +.06 EWZ(Brazil) 66.98 +1.65
Gold 1092.40 +16.10 Silver 15.54 +.245 Copper 3.1495 +14.10 Oil 75.30 +.79 RBOB (Whsl Gas)1.937 +.008
European leaders said they were ready to support heavily indebted Greece to stave off a crisis in the euro zone, but disappointed markets by failing to offer any details on how aid would work.
EU President Herman Van Rompuy told a news conference after a summit of the bloc's leaders in Brussels that Europe was sending Greece a "clear message of solidarity."
But he also made clear that Athens had not submitted a formal request for aid and therefore the bloc could not make concrete pledges at this time, describing the promise of support as a "political statement."
European leaders are keen to prevent Greece's problems from spreading to other highly-indebted members of the euro zone and plunging the currency area into a bigger crisis that could reverberate around the globe.
But they also want to keep the pressure on Greece to implement a tough austerity programme designed to cut hundreds of billions of euros in debt and a deficit that totalled 12.7 percent of gross domestic product (GDP) last year—more than four times EU limits.
"The question of pledges (to Greece) was not raised because the Greek government has not requested any financial support, which means the Greek government believe they do not need this financial support, that is why I think we should not now speculate about scenarios that are so far not present," European Commission President Jose Manuel Barroso said.
Even with EU support, the Greek government faces a daunting challenge to consolidate its budget and restore confidence in an economy whose imbalances were exacerbated by the economic and financial crisis and where social unrest remains a threat.
Greece is part of the European union. It is one of the weak sisters. The problem will spread to the stronger countries in that union.
The blowup in Greece over their inability to pay their debt is another sign of deleveraging. Of course the EU will step in and aid the Greeks and "calm" the markets. It a just the tip of the iceburg. The most recent blowup was in November with Dubai World. Here are some comments from my November 27 post. Notice how the "strategist says in may be a good thing.
From 11/29/09 Michael Ganske, head of emerging market research at Commerzbank in London, said a default, which could ultimately benefit the region, "is becoming more likely." "At the end of the day it should be positive for Dubai, Dubai's sovereign risk should go down," he said.
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From 11/27/09: Dubai Spooks Investors But May Bring Buying Opportunity
While the immediate reaction Friday to the Dubai crisis was to sell stocks, many investors are more likely to wait for the issue to unfold before making any big decisions. In fact, caution rather than panic prevailed after the United Arab Emirates nation's ability to pay on its debts came into question
From Feb 10 2010. This news in more on the back page now
Dubai World Seeks 6-Month Debt Standstill: State-linked indebted conglomerate Dubai World intends to ask creditors for a six-month standstill on $22 billion in debt this month, until it completes restructuring, an Arabic-language daily said on Wednesday.
This is the way they are reporting this problem. Sound familiar.
Greek Debt Woes Could Be Good for Europe: Strategist
Published: Wednesday, 10 Feb 2010
Concerns over Greece's public deficit could end up being positive for the euro zone even though there is evidence of contagion in the region, Adrian Mowat, chief Asian and emerging markets equity strategist at JPMorgan, told CNBC Wednesday.
"You've seen a flight to quality, so the funding costs in France and Germany have fallen and the euro has weakened. So the events that are going on in Europe are ironically probably quite good for core Europe," Mowat said.
Greece makes up only 4 percent of the euro area's debt and 3 percent of its gross domestic product, Mowat pointed out. But concern over Greek debt has spread to other debt-laden euro zone countries such as Spain and Portugal, Mowat noted.
Oh Goodie...another "buying opportunity". I am sure will have many more of these buying opportunities over the rest of this year.
They same thing happened in early 2007 with the blowup of sub prime loan mortgages. They told us that it would be contained and that the problem would not spread to the big banks. This is the same thing but it is a world wide problem now. The problem is spreading. This process leads to Deflation not inflation. They cannot shovel money into the hole fast enough because they underestimated the problem. They also know it is just throwing good money after bad. What is happening now is an attempt to cover the problem and keep the public from panicking. Every new problem that is made public the same game will be played. The bailout followed by the rally that tells us that it is OK. This will continue until the problem is so visible that they come clean. It takes time to unfold but it will come.
EURO
IEV European 350 market.. Just starting down.Notice how it is lagging the FXE
This is the DJIA notice the action AFTER 11/30 when they told us that the problem in Dubai was a buying opportunity. The confusing part about the market is that it will rally off of this kind of news. They do not want sellers coming at them on this type of news. The sell off will be later. Remember they told us that this is a good thing, now they give us the rally.
Notes: I would like to see the VIX at around 22 to put on more shorts it is now 24.26
Mikey
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