Greece - The Problem That Just Won't Go Away
Greece, the problem that never goes away. Once again after a weekend of promises and joint statements, there seems to be no deal on the table. The EU Summit convened with Greek and IIF negotiators still in Athens trying to work out a deal.
Investors are worrying and moving from the euro into the USD, running for the safe haven.
The worries are not if or when a deal is struck but if Greece can survive and if the EU will accept a deal on the terms necessary. And better yet, what will be the assessment by the IMF of the amount of money needed by Greece. Estimates say that Greece will need atleast 10billion euro more the originally projected. The question is, will this be enough and will Greece be able to implement austerity measures and find a way to grow.
EU leaders, haven't said as much, but they are hoping that Greece can be settled before they have to deal with Portugal. Today Portugal bond yields, hit record highs, well above the 7% bailout level and beyond sustainable levels for Portugal. The 2-year yield today is up by 360 basis points to 20.78% and the 10-year is higher by 190 basis points to 17.14%.
Spain's unemployment is rising, where austerity measures are being implemented but growth is still a problem, Spain is maching to the same drummer as Greece.Spain reported a drop of 0.3% in GDP.
Last week, Chancellor Merkel, admitted the harsh austerity program is not working as expected.
Today, the calderon is bubbling over.
European markets were down today. The Stoxx Europe 600 index dropped 0.6% to 253.80, while the German DAX 30 index fell 0.7% to 6,467.21. The French CAC 40 index dropped 0.7% to 3,295.45. The FTSE 100 declined to 62.36 points, or 1.1%, to settle at 5,671.09.
The EUR/USD tumbled 1.3129 from a high on Friday of 1.3227.
US markets are also reacting to the uneaseness in europe, markets opened down today. After a 131-point drop, the Dow Jones Industrial Average was lately down 77.01 points to 12,583.45, with 24 of its 30 components losing ground. The S&P 500 Index also declined, down 8.67 points to 1,307.66, with the financial sector hit the hardest after a report that Germany wanted Greece to relinquish control of its budget process in exchange for another rescue package.
The Nasdaq Composite lost 26.18 points to 2,790.37.
Crude Oil and Gold are both trading down.
Crude Oil Pivot Points (Time Frame: 1 Day)
Name S3 S2 S1 Pivot R1 R2 R3