Home > Uncategorized > Brief Update: 2010/02/08: Ministers or Magicians? European G7 Luminaries Promise to ‘Address’ Greek Problem

Brief Update: 2010/02/08: Ministers or Magicians? European G7 Luminaries Promise to ‘Address’ Greek Problem

▪  Whatever else might transpire, they probably can apply a little bit of monetary magic in the form of guarantees for Greek short-term paper market to ensure near-term availability of liquidity that will provide a window (1 year?) for Greece to apply a broader fiscal fix. However much that also alleviates the near-term crisis atmosphere for the other European Monetary Union members with fiscal problems, it will leave some significant hostages to fortune.

▪ On the other hand, what all that meant to the markets was glaringly apparent Friday, as the initial rumors of some sort of address of fiscal problems on Europe’s periphery was enough to foment a sharp equities rally, and some softening of bonds and the US dollar. Yet, that very market reaction only reinforces the importance of the technical picture as a guide to trend evolution whatever the fundamentals of the moment might be.

▪  The most telling factor at the end of last week was that the timing of the somewhat soothing G7 leaks was right as the March S&P 500 future hit the low end of interim 1,050-42 support; it was a natural level for the equities to rally from in any event. However, its more major support is still not until down in the 1,025-15 range after its failure below important 1,080-75 support; which will still be formidable resistance on any near-term recovery…

▪ March T-note stalling at the top end of 118-16/119-00, the still discounted short money forwards (i.e. year contracts) and US Dollar Index that had already pushed out through the top end of .7950-.8020 resistance may not pull back very far unless the equities experience a substantial recovery. Which is to say…

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