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New Bailout Is a Reprieve for Greece, but Doubts Persist - Fullermoney
New Bailout Is a Reprieve for Greece, but Doubts Persist - Here is the opening from The New York Times' report on today's 'agreement':
LONDON - Greece may have dodged a default with its last-minute bailout deal but longer-term doubts over its ability to repay its staggering debts remain, raising questions about whether even more rescue money will eventually be needed.
European leaders were to sign off on Greece's second bailout of around €130 billion, or $172 billion, at their summit meeting in Brussels next week - subject to Greece taking immediate steps to put the deep structural changes that they agreed to into effect.
Greece must also persuade, if not actually force, its private sector bond holders to accept a higher than expected loss of more than 70 percent on their holdings to reduce Greece's debt stock by the targeted amount of €100 billion.
It is uncertain, however, if another round of austerity can bring Greece to a point whereby it generates enough revenue to pay off its obligations - even if the private sector debt deal goes through - and return to the market on its own.
Europe's leaders hailed the last minute steps, which included a reduction in interest rates on loans from Greece's first rescue in 2010, and European central banks foregoing profit on their Greek bond holdings, that allowed the deal to satisfy a mandate set by the International Monetary Fund that Greece's debt come down to 120.5 percent of gross domestic product by 2020.
My view - A crisis contained buys time and allows businesses to focus on their own prospects, and international investors to assess other situations which are more often than not considerably less threatening.
Today's interesting charts - Given the bearish yearend 2011 consensus, is it any wonder that so many market commentators are bemused by this year's gains to date? However, while they were presumably focussed on the never ending crisis meetings held by Euroland's officials, share prices were rising, as you can see from these charts for MSCI Emerging Markets Index and the MSCI AC World Total Return Index.
How is one to assess when news that everyone is talking about has already been priced in? Why not look at price charts?
And what is the top performing market so far this year? Is it Wall Street? No, the US market has done well but it is a middle of the table performance, at best. Try Egypt, where the Hermes Index is up 31.48% in USD so far this year. Don't worry if you missed it - I did too. However, the second best performer in 2012 to date is an old Fullermoney favourite.
This extensive chart review continues in the Subscriber's Area.
My personal portfolio: A new trade opened - Details and charts are in the Subscriber's Area.
Please note - Eoin is in Guangzhou and Shenzhen this week and will return to the office on February 27th.
Historic Archive: What were most commentators saying about stock markets last October? - The chances are it was scary stuff given the bearish consensus which you may recall. Now you can see what Fullermoney was saying at the time. For instance, would this analysis on Wednesday 5th October 2011, especially the chart reviews, have lent perspective to your investment decisions?
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