Greece Again
Markets still focus on Europe and in particular Greece. There are some rumors today that Unicredit and Deutsche bank have ceased to accept Greek government bonds as a collateral; there are also some rumors that the capital flight from Greece is reaching alarming levels. It looks the Greece story is approaching its climax and we will soon witness a bailout or a default (probably by a one or more Greek banks followed by sovereign default).
This will probably induce further Euro weakens and PIIGS sovereign bonds spread widening. I believe the Europe is macro-economically speaking better off than U.S., U.K. and Japan and Greek economy makes probably makes ten times smaller contribution to EMU economy than i.e. California to U.S. economy. Also, I think ECB monetary policy is more prudent than U.S., U.K., and Japan monetary policy.
All in all, I think “European debt crisis” in the end will probably will be just a opportunity to buy on the cheap Euro and European quality assets. The timing is not right jet, probably we will witness some additional weakness.
In the U.S., I believe that the U.S. equity markets have reached a crucial point, violation of S&P 500 1.000 mark could mean a retest of last years lows. Friday trading was a proof of a significant turning point in equities.
I believe U.S. Dollar will strengthen further and bring pain to the commodity complex, especially gold and crude oil. I will be looking for a opportunity to re-enter long gold position.
EU, Euro, Greece, Japan, PIIGS, S&P 500, U.K., U.S., U.S. Dollar