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Random Thoughts: Achtung Baby!


Germany pulls a "Jedi Mind Trick" with regard to Greek aid.


I just gave birth to my weekly syndicated vibe, A Five Step Guide to Contagion: Why European Debt Matters to the United States. It'll post tomorrow as per the usual schedule but I'm offering a heads up, as this topic seems particularly relevant. Remember, The Minyanville Underground Railroad has an early look on these weekly pieces, as well as other snazzy community courtesies, if you're so inclined.

The specter of Greek aid -- a midday headline read " EURO ZONE GOVERNMENTS HAVE DECIDED IN PRINCIPLE TO HELP GREECE-SENIOR GERMAN RULING COALITION SOURCE" -- was well timed; the wheels were starting to wobble on the wagon and it served as a spark in the dark. Soon thereafter, however, a spokesman from the German government called the report "unfounded."

Are we having fun yet?

The column I crafted draws the parallel between the first phase of the financial crisis and the current incarnation, that of sovereign defaults. Insofar as Greece is the problem child, the original headline scattered the shorts as the bears ran for cover. As Greece is a symptom, not the root cause, an open question remains: what will happen when Portugal, or Spain, or Ireland need help?

It's not dissimilar from Fannie (FNM), Freddie (FRE), and American International Group (AIG) during the initial stages of the financial crisis. The point of recognition will arrive that the problems are cumulative and the contagion cannot be contained. In the meantime, as we edge from here to there, be on the lookout for unintended consequences of the European austerity initiatives, including but not limited to social unrest and the abatement of risk appetites.

To be clear, I wouldn't be surprised to see a package crafted to help the troubled islands and an upside window materialize. If and when that is to occur, please take it for what it is and manage risk rather than chase reward.

Some Random Thoughts:

  • We often muse that we can learn a lot just by watching. While the intraday vacillations are at times stressful, they often hold valuable clues for individual equities. I shared that on the Buzz as I watched the begrudging rally attempts in Goldman Sachs (GS), Bank America (BAC) and Baidu (BIDU), which seem to be under distribution as the broader tape finds its way.

  • We're offering ten buck MV tees, spanking brand new hats and Hoofy and Boo Bobbleheads on Main Street!

  • Market breadth is firmer than a college cheerleader and buyers have thus far stepped in despite the German "Wasn't Us!" Still, with S&P double secret resistance directly above, the technical context offers nice and tight defined risk for those so inclined.

  • 500,000 kids. Take a moment and ponder the pebbles rippling in the pond. Between Minyanland and our community efforts to effect positive change, as channeled through The Ruby Peck Foundation for Children's Education, you should all be proud of what we're building.

  • I still think Jack and Renee should find love together; they both deserve it.

  • I've got more meetings than E-Harmony these days so lemme hop. Keep your right hand up, your eyes open and your thoughts positive; the proper perspective goes a mighty long way.


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