Greece Holds Euro Deal Hostage - Analyst Blog
November 01 2011 - 4:59AM
Zacks
A number of people had problems with buying into last
week's Euro-zone deal as a panecea for the problems ailing the
common currency. Their concerns were mostly centered on the lack of
details about how the bank recapitalizations would take place
and how the rescue fund (EFSF) would get
strengthened.
But those objections now seem almost trivial following the surprise
announcement by the Greek government to hold a referendum
on the issue. This announcement has overtaken last week's deal and
effectively ensures that global markets will remain hostage to
electioneering in Greece at least through January, which is the
earliest that a referendum could take place.
I would love to read the immediate (private) reactions to the Greek
announcement of the German chancellor Angela Merkel
and French president Nikolas Sarkozy -- aka "Merkozy." I am
not sure how colorful the French and German languages are. But
I can bet that their immediate reactions would make for
interesting reading if ever made public.
With the Euro-zone deal turning out to be no more enduring than Kim
Kardashian's wedding, we are back to square one on
the European question. Everything else takes a backseat.
We will likely need an impressive showing from the October
manufacturing ISM report coming out a little later to get our minds
off the Greek shock. But that is unlikely given Monday's
relatively soft Chicago PMI reading. The Fed starts its two-day
meeting today as well, but few surprises are expected on that
front. Other than Bernanke's press conference Wednesday
afternoon, the Fed meeting may be a non-event.
On the earnings front, we had a solid earnings and revenue
beat and positive guidance from Pfizer (PFE).
Archer Daniels Midland (ADM) came short of
expectations as high feedstock costs weighed on margins.
Baker Hughes (BHI) also came modestly short
of earnings expectations on in-line revenue.
if the market's behavior over the last few months is any guide,
then we can say with a lot of confidence that the Greek news
supersedes everything else. Reading "Merkozy's" reaction to
the Greek announcement would have provided some relief,
but unfortunately we may never see those choice words.
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