Courtesy of John Nyaradi.
A huge day in Europe (AMEX:IEV) tomorrow as U.S. markets look to Wednesday’s European summit meeting for resolution of the ongoing crisis on the Continent.
Major U.S. indexes reacted nervously today to the ongoing chaos and apparent 11th hour disagreements in Europe on the eve of the hugely important European summit. The Dow Jones Industrials (AMEX:DIA) lost 207 points or -1.7%, while the NASDAQ (NASDAQ:QQQ) gave up 2.3% and the S&P 500 (NYSE:SPY) shed an even 2%, all indexes giving up recent gains as uncertainty linger over Europe.
Major developments in the fast moving crisis include the IMF considering participation via a “special investment vehicle,” disagreements over the level of participation by the European Central Bank, how to increase the “firepower” of the EFSF (European Financial Stability Facility) and how big the “haircut” will be for Greek bondholders and still be “voluntary.”
Tomorrow’s the big day and, literally, the fate of the global financial system could hang in the balance.
In more mundane news, Amazon (NASDAQ:AMZN) had a huge earnings miss with earnings down more than 70% and the stock taking a double digit hit in the after hours session.
Bottom line: Expect the European coalition to pull this episode out of the fire one more time, most likely by relying on the backstop of the International Monetary Fund (IMF) which you can just translate to mean United States since we are its most significant member. If they don’t get past this speedbump, we can expect massive negative repercussions. However, the bigger problems are Spain and Italy, and if tiny Greece caused this much heartburn, one can only be concerned about the massive case of indigestion that’s waiting down the road.
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