A Brief Wrap

I'll cover the market in greater depth a little later, I have a financial meeting at 6:30 so I don't have as much time as I would like to cover everything I'd like to cover.

On the day that Greece was rescued, ES dropped 6.5 points, which is close to the biggest 1 day drop since December, there was a slightly larger drop earlier this month.

While I didn't have time to update our Credit/Risk Asset model, the more aggressive high yield credit underperformed the investment grade which is like the blue chips outperforming the Russell, it's a flight to quality and away from speculative, higher beta credit.

As I pointed out early in the day, financials were a notable under-performer.

Commodities were the clear winner today, from silver, gold, copper, crude, etc, which was a bit strange as AUD was weaker on the day as I pointed out in the last GLD post. In a rare turnaround, stocks lost more then commodities, my personal feeling was the failure of the Dow to hold $13k upset equities as they even broke lower then the EUR correlation. The volume at bot attempts was unremarkable as was the daily Dow volume which was about half of Friday's volume.

SRS had a strong close, not a huge percentage move, but a strong close obviously reflecting real estate and REIT troubles, which were brought to the forefront by China's 50 basis point Reserve Ratio cut for their banks from Friday as the real estate trouble there increases.

Both Home Depot and Walmart had difficult days, reminiscent of some of the stocks I rattled off on Friday's close, but I'll touch on both in greater detail later, suffice it to say, WMT lost nearly 4% on very heavy volume and HD gave up 2.3% intraday to close just above .50% again on heavy volume and an ugly closing candle.

It hasn't even been 12 hours since the "Greek Bailout" was announced and already there appear to be problems with hedge funds having possibly built up a large enough blocking stake to make the PSI deal dead on arrival. It appears that (I need to research this more) that Greece is set to introduce the retroactive CACs we have talked so much about with instead of a 95% threshold of bond holder agreement for the PSI to go through, a lower 66% threshold, if true, this could have many repercussions from lawsuits to default and CDS being triggered. Even the head of the IIF negotiating on behalf of Greek creditors says that Greek bond holders could kill the deal.

If you have time to read the Finance Minister's statement, I suggest reading it, you will see how insanely incompetent or genius it is, depending on the Troika's real intensions. Again, to briefly touch on some of the requirements that seem almost impossible to fulfill, Greece will have to pass legislation allowing the Troika to virtually administer Greece, Greece essentially becomes a Troika colony which will be difficult to pass given the climate in Greece among the 99% ers. Retroactive CACs seem to be a virtual certainty, while the ECB has changed the face of the bond market and created senior and subordinated debt, if you remember my post on the repercussions of such an action, you will remember they are dire and likely to bite the ECB in the rear with consequences that far outweigh any losses they may have taken on an official sector involvement plan.

Ignore the headlines that Greece has been saved, nothing is certain until all of the EU countries vote and some of the votes being considered would be after Greece's March bond payment.

Again, it all rests on the successful completion of the Greek bond swap, with no details as to what is considered successful and Greece must implement a wide array of painful austerity measures within a week, seeing how the political system works there and with elections in April, this alone is a huge hurdle.

My earlier article that touched on some of the issues making the "Agreement" rather un-agreeable were only about a quarter of the notes I had taken, they were just the most obvious and glaring pitfalls, since then even more have emerged and to think all of this from a roughly 3 page statement!

I'll post more later after I've had an opportunity to look at everything I normally check on.

In general though, I would say the market's mood was surprisingly sour as in the past, just the headline alone had the ability to send the market much higher, that is until the details were sorted out and understood. We didn't see that today and the whole Dow 13k issue was certainly strange.