Last week, the markets rallied nicely, up 4-6%. They were expecting something constructive from the G-7 finance ministers meeting this weekend in Poland, with the announcement last night. That didn't happen, and the markets are peeved this morning. Europe is down 2-3% already. Our futures indicate the Dow will lose about 130 points at the 9:30 open.
I expect all week to be rough, as the Greek prime minister set the stage by saying the next 7 days are critical.
Another thing is worrying me, i.e., equity mutual fund outflows. Saturday was the third anniversary of the collapse of Lehman, believe it or not. In the last four months, investors have taken out more money than they did in the four months prior to the Lehman collapse. One could interpret this as investors fearing the collapse of Greece will be worse than the collapse of Lehman, which I would doubt. Another interpretation is that investors are "once burnt, twice shy," which I suspect is more likely.
The most fear-based scenario is that the collapse of Lehman will be nothing compared to the collapse of Europe as a whole continent, which would be true. However, even if the European decisioning process proves to be as impotent as our American process of making decisions, which is hard to believe, it is also hard to believe that China will stand-by and lose their two biggest customers, without even trying to use their financial strength to gain geo-political advantage.
I plan to keep my head down and my powder dry for at least another month or so.
I expect all week to be rough, as the Greek prime minister set the stage by saying the next 7 days are critical.
Another thing is worrying me, i.e., equity mutual fund outflows. Saturday was the third anniversary of the collapse of Lehman, believe it or not. In the last four months, investors have taken out more money than they did in the four months prior to the Lehman collapse. One could interpret this as investors fearing the collapse of Greece will be worse than the collapse of Lehman, which I would doubt. Another interpretation is that investors are "once burnt, twice shy," which I suspect is more likely.
The most fear-based scenario is that the collapse of Lehman will be nothing compared to the collapse of Europe as a whole continent, which would be true. However, even if the European decisioning process proves to be as impotent as our American process of making decisions, which is hard to believe, it is also hard to believe that China will stand-by and lose their two biggest customers, without even trying to use their financial strength to gain geo-political advantage.
I plan to keep my head down and my powder dry for at least another month or so.
