It’s a very nice day in the market today with the S&P 500 (my preferred index) up 1.4%. Out of the 35 world indexes on my Bloomberg app, 28 are up today and nearly all the losing indexes are in Asia.
The good news from the market’s perspective in Europe. Progress is apparently being made on another Greek bailout and this one may involve a partial default. Trust me, there will be more to come.
This is a prolonged attempt to stave off the inevitable. The Greek economy is in rapid decline, the austerity measures are making it worse and so tax revenues are declining. With Greek debt at 160% of GDP there is no way this ends well for them.
What the European bankers are really buying is not so much Greek debt but time to let the other troubled countries get out of their messes. Unfortunately, they too have too little growth and too much debt. Most of them still are in recession. The economic trend in Southern Europe is flat to down but up in Northern Europe.
In the U.S. claims for unemployment benefits rose slightly while the total number of unemployed dropped, probably due to people giving up. In the government’s strange logic they no longer count as unemployed.
On the debt ceiling front, “Senate Budget Chairman Kent Conrad said Thursday that it’s impossible to enact the “Gang of Six” plan for spending cuts, a tax code overhaul and changes in benefit programs by the Aug. 2 default deadline, so a short-term extension of the debt limit is the most likely solution.” – CNBC
The markets are up, so let’s enjoy it. I look for more short-term gains ahead.