Courtesy of Daniel Sckolnik, ETF Periscope
“I must have a prodigious quantity of mind; it takes me as much as a week sometimes to make it up.” — Mark Twain
After a rather traumatic month of May that saw investors refocus on the Eurozone sovereign debt crisis with a vengeance, there now seems to be emerging a shift in the winds in terms of sentiment concerning the monetary union’s chances of survival.
Wall Street apparently likes to buy into new renditions of this same song with great regularity. It usually occurs after a EU summit, when the current round of leadership makes pledges galore, smiles in unison, and professes acknowledgement that the Eurozone must remain intact at all costs.
In turn, the market shows its appreciation for the gesture of solidarity with a wave of buying, often with just the right level of support to bring the major indexes back to the levels it had most recently tottered from.
This time, the positive spin on the Eurozone debt/banking crisis emerged from a two-pronged front.
First, word out of Greece this weekend was that the upcoming June election might end up with a pro-austerity candidate. This naturally would bolster the equity markets on both sides of the Atlantic, as it increases the likelihood that the latest bailout of Greece, courtesy of the European Union (EU) and the International Monetary Fund (IMF), will actually get paid back, and the Greeks would be casting a de facto vote for remaining within the Eurozone.
The other piece of news that grabbed investor’s attention was the fact that Germany’s Angela Merkel appeared to be somewhat more willing to discuss the matter of Eurobonds, a joint effort by Eurozone members to pooling the region’s debt liability. Eurobonds has been regarded as one of the few tangible solutions for its debt crisis, but Merkel has consistently balked, stressing that it is outside the boundaries of the existing EU law.
Still, the fact that France’s new president seemed intent on keeping it at the forefront of a special EU summit indicated to observers that it now might gain further traction, particularly as France and Germany must reach a modicum of agreement if the euro is to remain intact.
The remaining headlines for the week must be regarded as something of a split decision, as upbeat U.S. economic data seemed to stalemate the further deterioration of…
