I'm no economist and luckily I don't have to be. As I've been saying the last 2 days, the 3C charts are in such bad shape, there's almost no chance that this market doesn't fall.
While 15 minutes of alerts went off this morning, I took a look around at some of the news and as usual, Europe ALWAYS makes its rounds back into the spotlight of disaster within a few days. 3C has been warning us of this and probably much more that hasn't come to light yet.
Here's a quick round up of some of the disasters going on across the Lake Atlantic in Europe.
First, the ECB's interest rate decision this week didn't help and the Euro has paid for it, trading below the psychologically important $1.40 level.
The German Constitutional Court seems to have thrown a wet blanket on the spark of Euro Bonds.
Maybe most importantly, it's DoD day in Greece-Do or Die. Today is final day for greek bond Today s the last day for Greek bond holder to swap out for the debt that is supposed to be Greek bailout 2.0.
Greece has said t wanted a 90% conversion, but most think that was a bluff and somewhere around 70-75% would work. The problem? It is not happening!
Per Reuters, "investors in Greek government debt worldwide will tell regulators on Friday whether and how they will participate in a bond swap aimed at giving Athens more time to emerge from a debt crisis, with officials expecting a take-up of about 70 percent. Greece had threatened to cancel the deal unless it got 90 percent participation, which would see 135 billion euros ($189 billion) of its outstanding bonds maturing by 2020 swapped or rolled over in a global transaction it wants to conclude next month. Even with a participation rate of 70 percent or better, which is my current view, the PSI will proceed," said an Athens-based banker close to the procedures. German investors share that view, a big German bondholder told Reuters. A 75 percent takeup rate would be a success and enough to convince the political side of the deal , 90 percent was unrealistic from the beginning, he said. The threat to walk away may merely be a tactic by Athens to get most of bondholders on board, bankers said.
For more on this story, here's the link to Reuters.
Some say the Credit markets drive the Stock market, some say that wasn't the case during the Lehman Crisis. Many believe the same is true of Greece and Europe more broadly. Remember, one of my possible downside targets has been a new low.
The way the credit markets are working right now, the bond market is expecting a default or massive write-offs for Greek debt. Thus the Stock Market may very well be lagging in discounting this, although 3C underlying action has suggested Wall Street is taking it seriously, but seriously enough?
A Reuters journalist is circulating an email that has ramifications that are HUGE and IMMEDIATE.
"From colleague: trader friend just hit me with the following: There is “Chatter” in the market of a Greek Default this Weekend"
This is the reason European financials acted so badly last night.
Luckily, I don't have to be an economist, the charts have been warning for several days as you have seen.
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