Daily Investment Interpretations

Monday, May 14, 2012

2012-5-14: (Monday Night): The markets sank today on the news coming out of Europe: Fears of Greece euro-zone exit rattle markets; Banks keep pressure on U.S. stocks. The NASDAQ Composite moved down 31.24 points (-1.06%) to end at 2,933.82. The Dow went south 125.25 points (-0.98%) to close at  12,695.35; the S&P 500 tanked 15.04 points (-1.11%) to settle at 1,338.35. Oil ended the day  at 94.09: Oil ends below $95 on Saudi comments, Europe woes; gold ended at 1560: Gold futures at lowest in four months. The VIX climbed 1.98 to 21.76.
    "The chance of an 11th-hour deal for a Greek coalition looks increasingly remote, rattling financial markets across the euro zone."
    "All three U.S. stock indexes ended the day down roughly 1% Monday. Investors sold out of stocks on worries over the political and economic stability of the eurozone and the safety of the U.S. banking sector. More"  
       Permanent Link to Eurodämmerung  What this Paul-Krugman article says is that he and some associates foresee:
1. Greek euro exit, very possibly next month.
2. Huge withdrawals from Spanish and Italian banks, as depositors try to move their money to Germany.
3a. Maybe, just possibly, de facto controls, with banks forbidden to transfer deposits out of country and limits on cash withdrawals.
3b. Alternatively, or maybe in tandem, huge draws on ECB credit to keep the banks from collapsing. 
4a. Germany has a choice. Accept huge indirect public claims on Italy and Spain, plus a drastic revision of strategy — basically, to give Spain in particular any hope you need both guarantees on its debt to hold borrowing costs down and a higher eurozone inflation target to make relative price adjustment possible; or:
4b. End of the euro."
This may possibly explain today's stock market malaise.
    Marketwatch says: 

    Michael Gayed writes: Is a 'Summer Crash' coming?  "My stance on stocks has nothing to do with being a bull or a bear. What I think is meaningless. It's what the person I sell to thinks that matters." HI conclusion: a summer crash isn't likely, Rather, there is likely to be a melt-up once defensive money starts spilling out of bonds into high-dividend-yielding stocks.
    Latest EU woes pose threat for U.S
    European bourses feel pressure.
    David Marsh: Hope and trepidation for Hollande
    Treasury 10-year yields at year’s lowest level  
    O'Mahony: Notes on a new economic model  
    Michael Ashbaugh writes: Major Support Cracks?  
    Peter Brimelow brings us: Another summer sag for stocks?  
    China’s economy has yet to bottom  
    China’s easing aimed at housing  

    State of the Markets articles include:   
    Looking Ahead to Tuesday's Market  
    Quotable Quotes and Notable Notes From the Week That Was  "The Greek and French elections were so last Sunday ago, but certainly set the tone for a week of high market anxiety, This was further compounded by the Spanish banking situation and some weaker than forecast data out of China, although economic reports out of Europe and the U.S. showed a few bright spots thrown into the mix. JPMorgan’s stunning trading losses put a cap on an interesting trading week, with the market rebounding off sharp “news” premarket lows both on Monday and Friday. However, with the fade into the close on Friday afternoon the SPX ended the week with a -1.1% decline, the Dow ... Read More »"    
    China Cuts Bank Reserve Requirements 
    Market futures are slightly positive tonight..