Business News
Greece is in for discipline and bondage!
by Peter Switzer
Down yesterday, up today and so Wall Street goes as we await ‘the plan’ out of Europe for Europe. And that’s the way it will be until the huge uncertainty that created the big sell-off since August is whittled down to the usual uncertainty that justifies a majority of investors buying shares instead of holding risk-free assets.
But things are getting better with the Dow up five per cent over the past nine sessions, which is a good sign. The VIX or fear index is at 32 but it has been close to 50 in recent weeks and that’s another better sign.
Even the language overnight out of Germany was better compared to the utterances from the country’s finance minister the night before, who told us not to expect ‘the plan’ to come out of the 23 October meeting.
To offset this, Germany’s Chancellor, Angela Merkel, last night talked about having a European watchdog placed in Greece to watch them to make sure they keep up their end of the bargain!
The markets and the banks liked that and US banks were up on Wall Street overnight but they were helped by Bank of America reporting better than expected.
To the US economy, US producer prices went higher and better prices is an OK development especially when some US experts were worried about a recession, which brings deflation.
Also, homebuilder sentiment went higher but it’s still at low levels but it was another better-than-expected read on the economy.
The gain on Wall Street was better than it looks given Moody’s put a negative outlook on the AAA rating on France.
I’m not sure how long it will take to get investors less nervous about Europe but it will eventually happen and the progress is now miles better than a couple of months ago and that’s why share prices are also better than earlier this year.
Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.
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Published on: Wednesday, October 19, 2011
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