Congratulations to the voters of Greece! Yesterday, they voted to accept severe austerity, thus preventing a bearish attack on stock markets worldwide. Of course, their only alternative to severe austerity was a severe depression . . . a terrible choice between the Devil and the Deep Blue Sea!
Still. the world is celebrating, not because the war to end the European financial crisis is over, but because we lived to fight another day. Predictably, the Asian markets were up strongly. Europe also opened strongly but then weakened as Spanish bond rates rose, reminding us that today is just another day to worry about the European financial crisis. At least, Greece didn't kill the world stock markets today -- before we got a chance to worry or to fight!
Our headline-driven market will now turn its attention to the G-20 meeting in Mexico. In an ideal world of unlimited funds, the G-20 governments would simply bailout Europe. In the real world, the G-20 governments will urge Europe to bail itself out . . . SOON!
Our headline-driven market will be more focused on the regularly scheduled Federal Reserve meeting this week. The market seems pretty evenly-split as to whether the Fed will do "something" in the face of generally weakening economic data. I don't expect a market drop if the Fed does nothing but do expect a market jump if it does.
Next week, there is yet another European summit to deal with their crisis. Many European leaders complain they feel like they have a gun to their heads . . . GOOD!
Now, if that isn't enough headlines to drive the stock market, don't forget the U.S. Supreme Court is expected to release its decision on ObamaCare this month, and June is running out. I've enjoyed watching market analysts try to predict how the market will react, but that is Mission Impossible until we know what the Supreme Courts actually rules on. If the insurance mandate merely comes from the state government instead of the Federal government, I suspect the market will react positively. If the whole bill is declared unconstitutional, I expect the market will react negatively in confusion about the future of one-sixth of our economy. Who knows . . . nobody knows!
A headline-driven stock market is not as predictable as one driven by economics or corporate earnings -- nor as much fun! Another problem with a headline-driven market is that newspapers are published every day . . . darn it!
