I now have a rental car, which gives me plenty of freedom to move about Spain. As with everything, though, there is a price beyond the actual monetary cost. In my case, the price is learning to drive in Spain, as the road system here is not as efficient as it is in the U.S., and figuring out how to get around big cities and then to find parking when there. I will pay the latter price today, as I drive into Madrid for the very first time. Send me good juju …
Last week, I wondered specifically why investors were still holding back money from the equities market. This weekend, I may have found an answer or two. Actually, I understand the general reason – uncertainty and fear – but I wanted to know specifically what investors are still concerned about. This week, for example, some data and some events are coming up that will test the uncertainty factor.
Number one is Greece’s bond swap deal, a key part of the now approved bailout program. It could turn out to be a flop or it could go off successfully.
The chief negotiator for the body representing private sector holders of Greek bonds [Charles Dallara, International Institute of Finance] expressed confidence on Saturday that a bond swap deal would be completed successfully next week.
I guess if anyone on the inside knows, it would be this fella. So, let’s hope he is right, as failure to get it done would threaten the 130 billion-euro tranche.
Number two is the final approval from the EU regarding the bailout tranche Greece desperately needs. That will come if the bond swap deal goes off successfully, meaning between 75 and 90 percent of private investors must buy into the swap.
Assuming a sufficient number of investors accept the deal, European leaders should give final approval to the bailout in a teleconference on March 9.
Number three is the upcoming employment report. Based on the recent weeklies, this report should come in strong. As well, a recent government report suggests not only are folks getting back to work, they are making more money. That spells good news for the economy.
Wages and salaries in the third and fourth quarters grew a combined $197.3 billion, the most since the six months ended March 2007, according to revised Commerce Department figures released Feb. 29.
If all these events happen to the positive this week, the market might surely respond positively, one would think. Given the recent history, though, I would not place a big bet on it. The “potholes” are still out there just waiting.
ECB Governing Council member Athanasios Orphanides said on Saturday, more needed to be done to convince markets the euro zone had an effective crisis handling mechanism in place. “But you realize we have not solved the problem yet, because the risk is a lot greater than the risk we started off with two years ago.”
Yet, the further down this road of correction we travel, the less likely it is we will hit a big one. As I have said all along, none of this will get solved quickly – just one positive step at a time.
Trade in the day – Invest in your life …
