Long, hot summer? Greek, Eurozone storm clouds churning

Events could turn ugly in Europe or not this week, as irresistible force (Greek Communists) meet immovable object (German tenacity). Traders, place your bets.

Greek-Eurozone protest.
Our family version of a sign giving vent to one side of the Greek-Eurozone argument. Why in English? Who knows? (Via an apparently left-wing Greek Facebook page)

WASHINGTON, June 21, 2015—It’s time for one of the Maven’s summer getaways this week, as he heads down to Virginia’s Colonial Williamsburg to carouse with some longtime friends down in the Commonwealth’s Tidewater area. Weather looks to be steamy hot and a little stormy. Which potentially could also describe what this week’s market action, as the Euro-Greek pot comes to a furious boil.

“Negotiations” will allegedly resume between the parties on Monday, leading to… who knows? Speculation at this point, even by seasoned economic experts, is quite literally a crapshoot.

Greece’s current, obstinate Communist government is playing the usual Commie game of claiming to negotiate while not negotiating seriously and blaming the other party for anything and everything that goes wrong. (Reminds us of Iran.) It’s all getting to a point of absurdity that even Sam Beckett could never have imagined, as we noted a few columns back.

Sunday’s Wall Street Journal online has this to say:

“Without a deal this week that unlocks financing, Greece will be unable to repay €1.54 billion ($1.75 billion) of loans from the International Monetary Fund that fall due June 30. Europe’s part of Greece’s €245 billion bailout program would also expire June 30. The ECB is seen as highly likely to cut off emergency liquidity for Greece’s banking system. Athens would struggle to avoid default on nearly €7 billion of bonds that fall due in July and August. Greece’s economy could face another sharp contraction, and a lack of euros could well force Athens to issue IOUs to pay wages and pensions, putting the country on a slippery slope toward a national currency.”

(No link. WSJ Online is behind a pay wall and the Maven subscribes.)

All this is bound to have a deeply unsettling effect on world markets for much if not all of this week, and a major international market crash is possible at any time if things take a wrong turn which, given the current parties involved in negotiations, is very likely to happen.

On the other hand, despite the headline ups and downs of markets last week, internal and hard-to-detect selling (sometimes called “distribution” by active investors) has been steadily picking up momentum for weeks. If the market has, in fact, already been sold down to the point where a Greek exit from the Euro (aka, “Grexit”) is essentially a non-event, it’s possible that nothing much might happen at all.

We’ll just have to wait and see. International systems are so entwined, and western governments in general have become so crony-capitalist corrupt that anything goes. The only certainty is that governments, bankers, and their rich crony enablers have already taken steps to take care of themselves in event of disaster. As far as you and the Maven are concerned… well, who the hell are we, right?

We won’t even bother to get into German internal politics vs. Greek internal politics save for these observations:

The German people are sick and tired of watching taxpayer money being thrown away on a Greek government that apparently has zero intention of taking its obligations seriously.

The Greek people—the same ones who voted the Tsipris-led Syriza know-nothings into power—want to stay with the euro and in the Eurozone by an overwhelming majority.

It will be interesting to see if either government actually takes the concerns of its own people into consideration. Germany’s Merkel is likelier to be more attuned to her electorate in this case, while Tsipris’ Communists tell the public one thing but in truth don’t really give a damn, a little bit like the current administration in the U.S.

But again, trying to game this one is probably a fool’s effort. So we’re staying in our current investments. We’ve started increasing our holdings of the S&P 500 double-short ETF (SDS) as a hedge vs. our positions. And we’re now roughly 30 percent in cash.

We can’t in good conscience offer any trading tips at least for now in a situation that has gone entirely irrational. We’ll just white-knuckle it through this one and see what happens.

It seems that every year around this time, the Maven heads off on vacation with iffy connectivity as the investment world starts to spin out of control. Irritating to the max, but so is life in the 21st century.

We’ll be back from time to time this week as the situation warrants or whenever we can get on the net.

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Terry Ponick
Biographical Note: Dateline Award-winning music and theater critic for The Connection Newspapers and the Reston-Fairfax Times, Terry was the music critic for the Washington Times print edition (1994-2010) and online Communities (2010-2014). Since 2014, he has been the Business and Entertainment Editor for Communities Digital News (CDN). A former stockbroker and a writer and editor with many interests, he served as editor under contract from the White House Office of Science and Technology Policy (OSTP) and continues to write on science and business topics. He is a graduate of Georgetown University (BA, MA) and the University of South Carolina where he was awarded a Ph.D. in English and American Literature and co-founded one of the earliest Writing Labs in the country. Twitter: @terryp17