Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
The Big Short 2020 – World Pushes Credit/Investments Into Risk Again - 11th Jul 20
The Bearish Combination of Soaring Silver and Lagging GDX Miners - 11th Jul 20
Stock Market: "Relevant Waves Vs. Irrelevant News" - 10th Jul 20
Prepare for the global impact of US COVID-19 resurgence - 10th Jul 20
Golds quick price move increases the odds of a correction - 10th Jul 20
Declaring Your Independence from Currency Debasement - 10th Jul 20
Tech Stocks Trending Towards the Quantum AI EXPLOSION! - 9th Jul 20
Gold and Silver Seasonal Trend Analysis - 9th Jul 20
Facebook and IBM Tech Stocks for Machine Learning Mega-Trend Investing 2020 - 9th Jul 20
LandRover Discovery Sport Service Blues, How Long Before Oil Change is Actually Due? - 9th Jul 20
Following the Gold Stock Leaders as the Fed Prints - 9th Jul 20
Gold RESET Breakout on 10 Reasons - 9th Jul 20
Fintech facilitating huge growth in online gambling - 9th Jul 20
Online Creative Software Development Service Conceptual Approach - 9th Jul 20
Coronavirus Pandemic UK and US Second Waves, and the Influenza Doomsday Scenario - 8th Jul 20
States “On the Cusp of Losing Control” and the Impact on the Economy - 8th Jul 20
Gold During Covid-19 Pandemic and Beyond - 8th Jul 20
UK Holidays 2020 - Driving on Cornwall's Narrow Roads to Bude Caravan Holiday Resort - 8th Jul 20
Five Reasons Covid Will Change SEO - 8th Jul 20
What Makes Internet Packages Different? - 8th Jul 20
Saudi Arabia Eyes Total Dominance In Oil And Gas Markets - 7th Jul 20
These Are the Times That Call for Gold - 7th Jul 20
A Reason to be "Extra-Attentive" to Stock Market Sentiment Measures - 7th Jul 20
The Beatings Will Continue Until the Economy Improves - 6th Jul 20
The Corona Economic Depression Is Here - 6th Jul 20
Stock Market Short-term Peaking - 6th Jul 20
Gold’s Major Reversal to Create the “Handle” - 5th July 20
Gold Market Manipulation And The Federal Reserve - 5th July 20
Overclockers UK Custom Build PC Review - 1. Ordering / Stock Issues - 5th July 20
How to Bond With Your Budgie / Parakeet With Morning Song and Dance - 5th July 20
Silver Price Trend Forecast Summer 2020 - 3rd Jul 20
Silver Market Is at a Critical Juncture - 3rd Jul 20
Gold Stocks Breakout Not Confirmed Yet - 3rd Jul 20
Coronavirus Strikes Back. But Force Is Strong With Gold - 3rd Jul 20
Stock Market Russell 2000 Gaps Present Real Targets - 3rd Jul 20
Johnson & Johnson (JNJ) Big Pharma Stock for Machine Learning Life Extension Investing - 2nd Jul 20
All Eyes on Markets to Get a Refreshed Outlook - 2nd Jul 20
The Darkening Clouds on the Stock Market S&P 500 Horizon - 2nd Jul 20
US Fourth Turning Reaches Boiling Point as America Bends its Knee - 2nd Jul 20
After 2nd Quarter Economic Carnage, the Quest for Philippine Recovery - 2nd Jul 20
Gold Completes Another Washout Rotation – Here We Go - 2nd Jul 20
Roosevelt 2.0 and ‘here, hold my beer' - 2nd Jul 20
U.S. Dollar: When Almost Everyone Is Bearish... - 1st Jul 20
Politicians Prepare New Money Drops as US Dollar Weakens - 1st Jul 20
Gold Stocks Still Undervalued - 1st Jul 20
High Premiums in Physical Gold Market: Scam or Supply Crisis? - 1st Jul 20
US Stock Markets Enter Parabolic Price Move - 1st Jul 20
In The Year 2025 If Fiat Currency Can Survive - 30th Jun 20
Gold Likes the IMF Predicting a Deeper Recession - 30th Jun 20
Silver Is Still Cheap For Now - 30th Jun 20
More Stock Market Selling Ahead - 30th Jun 20
Trending Ecommerce Sites in 2020 - 30th Jun 20
Stock Market S&P 500 Approaching the Precipice - 29th Jun 20
APPLE Tech Stock for Investing to Profit from the Machine Learning Mega trend - 29th Jun 20
Student / Gamer Custom System Build June 2020 Proving Impossible - Overclockers UK - 29th Jun 20
US Dollar with Ney and Gann Angles - 29th Jun 20
Europe's Banking Sector: When (and Why) the Rout Really Began - 29th Jun 20
Will People Accept Rampant Inflation? Hell, No! - 29th Jun 20
Gold & Silver Begin The Move To New All-Time Highs - 29th Jun 20
US Stock Market Enters Parabolic Price Move – Be Prepared - 29th Jun 20
Meet BlackRock, the New Great Vampire Squid - 28th Jun 20
Stock Market S&P 500 Approaching a Defining Moment - 28th Jun 20

Market Oracle FREE Newsletter

AI Stocks 2020-2035 15 Year Trend Forecast

We Have Tsipras and Merkel to Thank for This Market-Crushing Investor Profit Play

Companies / Investing 2015 Jul 16, 2015 - 03:01 PM GMT

By: ...

Companies

MoneyMorning.com Peter Krauth writes: Greek banks were hanging onto a cliff's edge by their fingernails when Greek and European parliaments and finance ministers debated the future of Greece within Europe.

But less than a week after the referendum that said "όχι!" (No!) to more austerity, Prime Minister Tsipras had already betrayed that vote, proposing considerable cuts in exchange for yet another lifeline. And yet, the euro hardly budged more than a couple of percentage points, and European stocks are actually positive on the year.


That is just where our can-kicking profit opportunity lies…

Tsipras Is Doing What Politicians Do Best

As Greeks prepared to vote in their recent referendum, Prime Minister Tsipras told fans at Syntagma Square in Athens, "I call on you to say a big 'no' to ultimatums, 'no' to blackmail. Turn your back on those who would terrorize you."

The public backed him, voting 61% "No."

Finally, they were done with all that "austerity" being imposed by the rest of Europe.

And yet that referendum was futile. You see, Greeks voted "No" on a bailout offer that European creditors had already withdrawn.

The people thought they were giving Tsipras a mandate to get a "better deal."

But just four days later, Tsipras' government went back to ask its creditors for nearly the exact same deal, reneging not only on the referendum outcome, but on most of the promises his party had made to win the January election.

At left you can see what that initial proposal looked like…

Trading Independence for Time

After negotiating for 17 hours, and well past the initial Sunday deadline, a deal was finally reached to avoid a "Grexit"… for now.

Tsipras caved on nearly all his referendum-mandated demands: less austerity and a reduction in debt. The latest bailout, worth another €86 billion ($94 billion) over three years, will include still more austerity, and of course even more debt.

And still, just for this deal to proceed, the Greek Parliament needs to pass legislation covering everything from full pension reform to increasing the country's value-added tax (VAT). Even then, Eurozone finance ministers will have to rubberstamp these changes, and their own parliaments will need to provide their own approvals.

Many observing economists believe the deal is so onerous, it will ultimately prove impossible to implement.

In the process, Greece has abandoned the little independence it still had and bought itself more time.

You see, a principal feature of the latest deal is the Greek Privatization Fund (GPF).

Greece will have to place government-owned assets into a structure that needs to generate €50 billion of cash through sales. €25 billion of that will go to repay funds needed to recapitalize Greek banks, €12.5 billion to reduce the debt burden, and €12.5 billion towards internal investments.

The GPF will contain valuable Greek assets including utilities and shipping ports. But national treasures like the Acropolis and popular tourist islands are "hands-off."

Initially, the Germans proposed GPF be located in Luxembourg (and partly run by Germany, of course), but that was abandoned as politically suicidal for Tsipras. Rather, the fund will be set up in Greece, managed by Greek authorities, and overseen by "the relevant European institutions."

This situation sets the stage for the stability we need to make this particular play…

The Investment Set to Beat the Markets

Yes, it's true that Greece is a broken economy, with the largest (and still growing) debt in the EU, and unemployment topping 25%. Its banks are shuttered and ATMs running dry until the latest bailout gets the rubber stamp.

But meanwhile, the Barclays Euro Government Bond 10 Year Term Index is only down 2% on the year and has climbed in the past month.

And the Eurozone remains one of the largest and most significant economic areas.

I believe that's the market's assessment that the latest Greek bailout deal will allow European stocks to resume their recent trend and continue outpacing American stocks.

The SPDR Euro Stoxx 50 ETF (NYSE Arca: FEZ) is up 4.7% compared to the S&P's 2.05% year to date.

FEZ is a great proxy for some of the largest companies that are part of the 19 Euro Stoxx Supersector Indexes. Current holdings hail from the healthcare, energy, industrial, financial, automotive, insurance, and consumer staples sectors.

Its top 10 consist of mostly European household names: Sanofi SA (ADR) (NYSE: SNY), Total SA (ADR) (NYSE: TOT), Bayer AG (ADR) (OTCMKTS: BAYRY), Banco Santander SA (ADR) (NYSE: SAN), Anheuser-Busch Inbev SA (ADR) (NYSE: BUD), Daimler AG (OTCMKTS: DDAIF), BASF SE (ADR) (OTCMKTS: BASFY), Siemens AG (ADR) (OTCMKTS: SIEGY), Allianz SE (ADR) (OTCMKTS: AZSEY), and BNP Paribas SA (ADR) (OTCMKTS: BNPQY).

Because don't forget, as bad as this deal may be for both sides in the long term, for now it keeps Greece inside the Eurozone. Meanwhile, the European Central Bank is still very much in QE mode.

And that means Europe is not finished playing catch up to the U.S.

With the new agreement all but locked up, European markets are returning to their cyclical bull market.

It's time to go long European stocks through FEZ – use a hard closing stop of $34.86 (its January low) and a 15% trailing stop.

Source :http://moneymorning.com/2015/07/16/we-have-tsipras-and-merkel-to-thank-for-this-market-crushing-profit-play/

Money Morning/The Money Map Report

©2015 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules