Friday, February 10, 2012

Greece: Deal or No Deal; Booking Profits Today

Finally, after four days of running essentially in place, stocks took a morning downturn and turned it into an all-day event, as US indices suffered their worst loss of 2012.

The catalyst for the day-long decline was none other than Greece, where the deal struck on new austerity measures just yesterday quickly became unglued as the leader of the LAOS party, Giorgios Karatzaferis, said publicly that his 16-seat faction (of Greece's 300-member parliament) would vote against the planned austerity measures this Sunday.

The departure of the small faction caused a major uproar in financial markets, which see the defection as a major blow to the overall refinancing plan put in place by the EU, ECB and IMF (the "troika"). Globalist financial leaders have demanded that the Greek government sign onto the strict austerity measures before taking further steps to ease the crisis in Greece with another round of bailout funds before the deadline for Greece to repay roughly $14 billion occurs on March 20.

Additionally, as many as five cabinet ministers of the newly-formed Greek coalition government have reportedly resigned, signaling even further defections from the nation-destroying plan to keep Greece afloat and the Archbishop of Athens - and leader of the Orthodox church - sent a letter to Prime Minister Lucas Papademos warning of a "social explosion" of poverty, homelessness and rioting should the country continue on its current, destructive path.

Even today, protesters hurled gas bombs and rocks at Greek police in and around the capitol as the nation enters a dangerous, deadly phase of its struggle for sovereignty.

The bottom line is that Greece can and probably should extract itself from the EU and begin - as soon as humanly possible - converting from the disabled Euro currency back to the drachma. The levels of debt are far too onerous for Greece to ever repay without severe costs in lives and livelihoods, and the rising passions of the people may dictate to the government and the gloablist EU statists the correct course for the country, lest it fall to the desires of those clamoring for continued support from the ECB, which thus far have produced only a worsening situation.

A disorderly default by Greece would open the door to similar situations in Portugal and especially Ireland, where debt slavery is becoming a way of life and the citizens of the Emerald Isle find themselves chained to the wishes of their banker overlords. Extrication from the EuroZone and the Euro currency is now being seen as a path toward self-sufficiency and national unity in countries with severe debt issues, including Spain, Italy and Belgium.

Dissolution of the European Union and destruction of the Euro currency caused by domino-like defections is an end-game that the globalists and supra-governing mechanisms of the EU cannot even begin to comprehend and that is why almost all European stock markets - along with US markets - ended the day deep in the red.

The losses today in the Dow, NASDAQ and S&P 500 were a sudden shift from the plodding gains of recent days and may be signaling a shift in global economic expectations. Today was surely a day in which some short-term traders ran for cover, as US Treasury bonds improved, pushing yields lower.

A move lower in oil, gold and silver, as the US dollar rose in value is probably a temporary condition, at least for the metals, but any continued move lower by the Euro - which took a sudden downturn on today's news - would more than likely contribute to a run on equities as the correlation trade between the US dollar, the Euro and risk assets continues to suggest.

With the turn of the new year, the Euro has strengthened, but the destruction today should serve as a warning to investors and speculators that the recent strength is hardly sustainable. Imagining a Euro at 1.20 to the dollar, or even at par, could turn out to be the worst nightmare for many hedge funds and even long-term investors.

US stocks have reached a point of no return - at or near multi-year highs - and the concept of a euro-fomented retreat is not only palpable, but probable at this juncture.

Investors worldwide will be holding their collective breaths this weekend in anticipation of the Sunday vote by Greece's parliament and the response from the European financial authorities. While complete resolution is a distant hope, some clarity should come to markets by Monday, though the projected outcomes are radically different.

Plenty of profits were booked today, and, if the Greek situation continues to devolve into chaos, many more traders and investors will be heading for the sidelines. The markets - indeed, all of Europe and most of the world - are headed toward a climatic conclusion or convulsion in the days and weeks ahead. Should the Greeks decide to reject austerity and the burdens of continued debt, all bets are off.

Dow 12,801.23, -89.23 (0.69%)
NASDAQ 2,903.88, -23.35 (0.80%)
S&P 500 1,342.64, -9.31 (0.69%)
NYSE Composite 7,992.05, -89.20 (1.10%)
NASDAQ Volume 1,786,934,125
NYSE Volume 3,798,787,500
Combined NYSE & NASDAQ Advance - Decline: 1420-4233
Combined NYSE & NASDAQ New highs - New lows: 144-21
WTI crude oil: 98.67, -1.17
Gold: 1,725.30, -15.90
Silver: 33.60, 0.31

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