Bad news for doomsday merchants
by Peter Switzer
We will have to wait to get the final acceptance but what is aimed for is to reduce Greek Government debt by 46.5 per cent by getting private lenders to the Greeks to swap their old Greek bonds for new ones. So the new ones will be 53.5 per cent less valuable, attracting less interest and they will mature over a longer period.
It’s the debtor’s deal from heaven or maybe it’s mammon!
The big news
The Dow was up 70.61 points or 0.55 per cent to 12,907.94 while the S&P 500 put on 13.28 points or 0.98 per cent to 1365.91
The big news overnight was the bond swap deal with private investors. Over 85 per cent of bondholders have said yes to the bond swap deal.
This is all good for the overall deal and it meant European stocks greeted the news by spiking higher.
How good was the news? Well let’s just look at the market response with the UK’s FTSE up 1.18 per cent, the German DAX up 2.45 per cent and the French CAC 40 a whopping 2.45 per cent higher!
I advised earlier this year that if the news flow showed that the good news was beating the bad news then we were going to be off to the races with stocks this year and that is exactly what’s happening.
Positives and concerns
Europe is getting some wins with the European Central Bank lending close to a trillion euro to the important banks of the EU for three years at low interest rates, on top of the pledges for fiscal responsibility from the governments of the Continent added to this pending Greek deal. These have worked to add to the positivity coming out of the recovering US economy.
Sure there are other issues such as Iran and the price of oil, a possible war between Iran and Israel, looming elections in France and even Greece on top of a US election but these all make up the wall of worry that always goes with stocks.
By tomorrow morning we will see the latest reading on US jobs and more good news is expected. If this comes in as expected then the stock market could easily spike higher.
The number to watch is 210,000 new jobs and if this is topped, it will not only be a great effort, it will really fire up stocks.
I never thought I’d write this but — go the Greeks!
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Published on: Friday, March 09, 2012
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