As we approach the anniversary of Woodstock we realized that we may be again in the midst of another Summer of Love. The market has been all about peace, love and understanding this summer as investors mark time waiting for the latest central banker intervention intended to goose asset prices higher. The economists from Roubini Global Economics (by way of John Mauldin) put together a piece which shows that the peace, love and understanding may last into September. But look out come September. The month is chalk full of events for just about everyone. Here is a quick synopsis.
Greece – The troika is due to make a ruling on whether to release additional tranches of funding to Greece. If they do not then Greece defaults. Want to bet that Greece gets their money? Spain – the accountants are due to tell us exactly how much Spain needs to bail out their banks. Germany’s constitutional court was due to announce their verdict on the ESM with the activation of the ESM being the linchpin for the latest plan from the ECB to rescue Europe. That verdict which was due on September 12th may now be delayed due to further lawsuits. Roubini and his associates also expect Portugal to begin negotiations on their second bailout package next month. There is more including an election in the Netherlands and a budget from France. All in all a pretty action packed month. Enjoy the beach. It’s almost time to get back to work.
Market tried to give back some of its gains yesterday but clawed its way back post European close. There is a bid under the market as shorts and the under invested look to buy. Wednesday is looming large as we approach the August option expiration on Friday. Traders may try and get the market above 1400 to finish in the money. Support could wane in the aftermath of trader’s closing out option positions before Friday’s expiration. Keep an eye on the calendar.
We told you to keep any eye on Europe as Merkel came back from vacation. Coincidentally, the courts in Germany feel that they may need more time to dissect the case for and against the ESM as more lawsuits come to the fore to challenge its constitutionality. The market continues to bump up against the 1406 level on the S&P. September looms very large in Greece, France, Germany, Portugal and Spain. Keep an eye on Europe.
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Answer: My son Chris really liked this one that he got from his math teacher. Suppose I have only one match. I enter a room with an oil lamp, an oil heater, a candle and some kindling wood. Which should I light first? The match.
Today’s Question: The Woodstock Festival opened on august 15, 1969. Who was the opening act?
A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty. – Winston Churchill
Disclosure: This blog is informational and is not a recommendation to buy or sell anything. If you are thinking about investing consider the risk. Everyone’s financial situation is different. Consult your financial advisor.