Greek debt crisis: ‘Something awful’ this way comes
The next “final” twist in the exhausting Greek drama is upon us, and it’s looking like “something awful” is about to befall the country’s banking system, Citigroup analysts said yesterday.
A deal was on the table Friday, but the ECB’s move over the weekend to freeze emergency loans for Greek banks has led to capital controls and, in turn, has increased the odds of a Greek exit from the euro zone. For investors, it means a battered euro, wrecked equities and maybe, just maybe, a more reluctant Fed when it comes to ramping up interest rates.
So far, the U.S. stock market is starting this holiday-shortened week with a sound thrashing. It was even worse in Asia, where the Shanghai CompositeSHCOMP, -3.34% broke lower into bear-market territory despite a surprise interest-rate cut over the weekend. Technology, in particular, was slammed.
While the butterfly wings in Greece seem, at least to some degree, to be rattling markets all over the world, one hedge funder and blogger is hardly sweating the Hellenic end game.
“There’s a lot we can’t know. But there’s also a lot we do know, and pretty much all of it has changed for the better,” Mark Dow, author of Behavioral Macro, wrote. “When I look at Grexit, I see a world in much better fundamental position to avoid the cascading systemic contagion we (rightly) feared as recently as a year ago. Now is the time to do what the system could not handle in 2010: get Greece off the toxic medication and onto a path of growth and dignity.”
Key market gauges
Dow YMU5, -1.01% and S&P ESU5, -1.03% futures are down about 1%. EuropeSXXP, -2.06% is also faltering in the early going while Asia ADOW, -1.86% closed with deep cuts after an abysmal stretch last week. The euro EURUSD, -0.3761% is moving lower, as expected. Gold US:GCM5 was higher, but oil CLU5, -1.12% fell into the red.
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