Courtesy of John Nyaradi.
Hope continues to lift markets as investors brace for Greece elections on Sunday
Hope continued to lift markets today ahead of Greece elections this Sunday as the SPDR S&P 500 ETF (NYSEARCA:SPY) gained .50%, the SPDR Dow Jones Industrial Average ETF (NYSEARCA:DIA) added .77%, the PowerShares QQQ Trust Series 1 ETF (NASDAQ:QQQ) added 1.01%, and the iShares Russell 2000 Index ETF (NYSEARCA:IWM) gained 1.34%.
Perhaps investors are blinded by mere hope or there is actually a chance this Sunday’s elections will not crater the world. Either way, we are less than two days out from the widely anticipated “G-Day,” where Greece could potentially seal its fate in terms of quitting the Euro. From there, anything is fair game, and fair game includes bank runs, depressed indices, recession, depression, a possible Spain-Italy-Portugal exit, and the overall devastation of the Euro and world economies.
This fair game might sound overtly dramatic, but it is fair game if indeed Greece’s Syriza party gains control of the Greek government this weekend. Although it could take several days or weeks for a Syriza controlled Greece to officially denounce austerity measures, default on its debt, and leave the Euro, the mere fact that a political party in Greece could cause that much damage to not only the European financial system but also to the global economy at large is reason enough for concern in my mind.
In any case, I hope I am wrong and that he Greeks elect a government which is somehow committed to the Euro as a whole and that the Europeans continue to trudge along and fix this mess. Judging by Greece’s last rounds of austerity measures however, which included riot police, rubber bullets, fires, and molotov cocktails, I am curious, to say the least, which political party will win.
In other news, the hope inspired markets were probably fueled further by positive remarks of the G-20. The G-20 has affirmed its position on the European situation, stating that the G-20 partners will support the Eurozone via more liquidity. This seems like a nice gesture and all, but how many times can we continue “affirming” more capital to this situation?
Consumer sentiment definitely did not fuel today’s hope rally, as today’s consumer sentiment report hit a new low for 2012. The Consumer Sentiment index dropped from 79.3 to 74.1, which continues to illustrate the state of today’s anemic economy.
Bottom Line: Next week could go a variety of different ways, ranging from complete devastation to a mild blip on the map. All eyes are on Greece as we rapidly approach “G-Day” this Sunday.
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