The term “quadruple witching day” sounds like something from a teen-horror flick or a pagan holiday. It seems out of place for the U.S. market. Nevertheless, this is the day, and we will see if anything spooky happens as traders and investors unwind positions and the VIX retreats.
Actually, the spookiest thing happening today is question of Greece. Specifically, the scary part is the game of chicken that is going on. Those with the money are reluctant to state that more money is coming, but if no more money is coming, Greece will default. A default would mean those with money already invested in Greece would lose their investment. That loss would ripple through the international financial system, much like what happened when the U.S. government let Lehman Brothers fail. Thus, it is a game of chicken in that those with money are driving fast toward their investments in Greek debt and Greek debt is driving fast right back at them. Which eye will blink?
Perhaps neither will blink. Perhaps some brave soul with a vested interest in keeping Greece alive will jump in the middle spurring those with money to invest more of it into Greek debt. Me thinks this will happen …
With Greece on the verge of a debt default, investors will focus on whether China promises to buy even more debt from beleaguered European nations including Greece, and increase its investment in the region. China is a natural prospective investor in European assets and government debt because it has $3.05 trillion in foreign currency reserves, the world’s largest. With a quarter of the reserves estimated to be invested in euro-denominated assets, it is clearly in Beijing’s interest to help Europe survive its debt turmoil.
Yep, it could be that China is the brave soul that keeps this all from crashing global financial markets, a not-so-relishing prospect so near to the 2008 collapse. Me thinks also that the world learned from the error of letting Lehman collapse. As unfortunate as it is, the big dogs with money dominate the world, and their paws are in every facet of the global economy. Thus, those with money will, in the end, save themselves.
To finish off this week, I give you an excerpt from a reader’s comment on a column I wrote recently. The subject is not important, but the last line of his commentary is insightful and spot-on when it comes to framing a perspective on trading or investing in the market …
Obviously, both camps cannot be all wrong or all right but it is all about what people want to see not necessarily what they see.
Yes, perception is often reality in the market because the “market R us,” the often irrational humans who are subject to greed, fear, and self-delusion.
Trade in the day – Invest in your life …
