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Wednesday 2 November 2011

Greece, wadup? Problems ?

It took a while for the financial markets to cool of from the Greek debt concerns (especially as the credibility of the European Rescue Fund is close to zero without IMF, Chinese, Russian and Brasilian support). I hope you enjoyed the brief silence, cause last night George Papandrou decided on the 31st of October (coincidentally on Halloween) to stirr things up a bit one more time and call for a referendum on the Greek debt deal and restructure the defence ministry.  As his power over the parliament is schrinking, the confidence vote may turn into a desaster if he doesn't manage to shore up enough support. Meenwhile stock markets around the world take a hit, with the S&P down to $1230 and the FTSE down to 5410.



What were you thinking Pap ?

The Greek Prime minister's decision to hold a confidence vote on the European greek debt bailout came as a shock to the European officials, with French president Sarkozy declaring it "surprised all Europe" and the Japanese finance minister Jun Azumi saying that "everyone is perplexed" about it. The big question is what happens if the confidence vote fails and the Papandrou cabinet will have to be sacked.

Market reaction

In response to this twist, the European equity markets plunged, with the German index DAX down to 5847 from its recent high of 6421. Most likely it will test the support level at 5735, and in case of more bad news, a break from this level could push it down to 5122.


The S&P joined the European pain and plunged more than $70 from its October 30 high, before bouncing back to the $1233 level. Today's FOMC interest rate decision will have shape the future equity market returns: there is a small chance of FED announcing a QE3 programme as the inflation is escallating, but it may in turn, announce that they will boost Mortgage Backed Securities purchases for the next quarter, to stimmulate the real estate market.


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