Whatever This “Greferendum” Thing Is

Equities start the day lower on whatever this “Greferendum” thing is.  I leave for a week and you guys let Greece come back and bite us?  Ok, that’s it, I’m not leaving you in charge anymore, I guess I need that teenage babysitter still. Greece is shutting down its banks and putting the bailout measures to a vote so I guess that’s the end of the bull market in the US huh? Actually it’s not, and if you are puking out Disney because of a situation that’s been going on for 5 years than I don’t know what to tell you. Imagine you decided that the market was too scary in 2011 when this whole thing kicked off. Europe was quaking, bond yields were soaring, headlines were blaring, you figured that cash was the best option in the face of massive uncertainty. What did you miss?  Oh I don’t know, about 900 S&P points, a 91% return to be exact.   But this time is different right? They are closing banks and they are on the verge of default. Ok, that’s troubling, and a lot of people are going to suffer some very real consequences. Here’s the thing though: if there’s two things I’ve learned since 2008 it’s that the sun will rise tomorrow and Governments / Central Banks will do whatever it takes to make sure the system doesn’t implode. If we need some new acronym filled program to ringfence Greece then they will invent it. If they need a parallel currency for a awhile, they will issue it. If they need PhDs and Bankers to sort out all the mess, they will hire them. Worry about the following before you worry about Greece: Puerto Rico default, Transports falling, Breadth, a cool summer, Fed policy mistakes, Chipotle running out of Barbacoa (the only option), and another Bush v Clinton election cycle. Everyone has had enough of this Greece issue, please just end it.

 After the open all of my stock index charts looked like this, and if you really want an eye opening look at carnage wander over to the indices trading across the pond.  Italy -5%, Spain -4.5%, Cac 40 -3.7%.   Yikes, that’ll leave a mark. We had a small rally in the morning as optimism about this being “no big deal” worked its way thru our collective thoughts, unfortunately it didn’t last long and by lunch the S&P had lopped off 1.5%.    Winners and losers?   If the company produced a product that keeps lights on in your home it was up, if it produced anything else it was down.   Hey…you….sitting there on the Tube reading this email….are you ready to hear about Greece for 4 days straight?  No?  Well too bad, because that’s all that’s going to happen.  Dear CEOs / CFOs reading this recap, if you have bad news lurking I’d dump it on the tape TONIGHT! Would anyone even notice? Your product made a bunch of tree frogs sick and the EPA is on your back? Time for a press release! Earnings look a tad light because your new spandex socks are ugly? Call up Bloomberg asap! Anyway, the market spent all morning / afternoon puking on itself because an issue that’s been with us for half a decade might be coming to some kind of messy conclusion.

 The end of the day saw stocks REALLY turn lower and by the time the bell rang we had lost 2%.  Take a look at this one day move in the VIX…if that doesn’t wake the market up from its summertime slumber I don’t know what will.   Only 6 names in the S&P closed positive today…that is an absolute wood shedding.   So before we wrap this up and drown ourselves in a vat of bourbon I wonder…what happens if Greeks vote Yes to this referendum?   Do we re gain all these S&P points in one fell swoop?  Probably not right?  What I’m trying to say is this….do we really believe this entire selloff is about Greece or are there just too many overhangs and this one finally broke our back.  Greece is just one thing, there are a few others circling which make me uneasy.  Oh well, we’ll find out soon enough, but the bull market has definitely been put on hold.

Final Score:  Dow -195bps, S&P500 -209bps, Nasdaq -240bps, Rus2k -258bps.

News Highlights:

For our final video I wanted to link something relevant to today’s price action.   I think this one worked out pretty good! 


Have a good night.