Market Commentary

Life is indeed stranger than fiction.
March 19, 2010

Life is indeed stranger than fiction.  Yesterday the Greek government stated it would go to the International Monetary Fund (IMF) if no explicit help comes from the European Union (EU) summit on March 25.  The odds of such a bailout from the EU are remote based upon recent comments from Germany, the apparent lead country.

France on the other hand stated the IMF option for Greece has already been dismissed by the European Central Bank (ECB) commenting if the IMF option is considered/taken it would demonstrate to the world the EU cannot solve it own problems/crisis.

If Greece goes to the IMF would Greece—or any other country that continues to habitually flout regulations--be expelled from the EU?  As per the WSJ it takes all 27 members to pass such a resolution. 

Obviously if Greece is expelled its borrowing costs would soar.  But would borrowing costs soar anyway if Greece is indeed forced to the IMF as the EU has all but in name already expelled the country?  What about other countries that are on the proverbial bubble?

And then there is France.  How will this prominent EU country and the country that is now heading the ECB in rotation, view such a situation? 

Wow!  This is almost as dramatic as our health care debate.  The vote will take place on Sunday.  Most democratic leaders have declared the measure will pass even though at the time of this writing all major news services declare the Administration still lacks the votes.

What happens to the Congressional leadership if the measure fails?  What about the judicial challenges if unknown legislative measures are utilized to ensure passage?  And then there is the electorate.

I believe the President has awakened the great American electorate.  If he is able to harness this energy he could potentially emerge as one of the greatest leaders in recent history.  If he does not his Presidency might be regarded in a similar manner as other less notables.

What an exciting time to live!

As penned many times the markets are a microcosm of all variables of life, each changing daily in their degree of significance.  The potential unintended consequences facing the markets both here and abroad are infinite.

Speaking of the markets, both treasuries and equities were relatively quiet with many closely following the health care debate.  The data, which on balance was stronger than the consensus view, had little impact.

Last night the foreign markets were up.  London was up 0.63%, Paris up 0.45% and Frankfurt up 0.22%.  Japan was up 0.75% and Hang Sang up 0.19%.

The Dow should open nominally higher on ban profit optimism.  The 10-year is off 1/32 to yield 3.68%.