Buy Stocks as PIIGS will Escape Slaughter!
Posted on June 14, 2012 at 11:16 AM EDT
With the Greek elections, the second of the sort, due this weekend, bond investors have been leading the PIIGS to slaughter this week. Rising bond yields in Spain forced the pivotal European nation to seek assistance last weekend, which in turn drew a downgrade by Moody’s (NYSE: MCO) this morning. The threshold to the ultimate disaster may soon be breached, with Italian bond yields rising sharply today. But, never fear dear readers and panicked investors, because the Greek result seems set up for a relief rally. So, please be sure to read this report full through.
Relative tickers include SPDR S&P 500 (NYSE: SPY), Vanguard MSCI Europe ETF (NYSE: VGK), iShares MSCI Spain Index (NYSE: EWP), iShares MSCI Italy Index (NYSE: EWI), Global X FTSE Greece 20 ETF (NYSE: GREK), National Bank of Greece (NYSE: NBG), Coca-Cola Hellenic (NYSE: CCH), Hellenic Telecommunications (OTC: HLTOY) and Marfin Investment (MIG.AT).
Buy Stocks Now
Spain’s sovereign debt rating was cut to one level above junk today, to Baa3, from A3. Moody’s said Spanish risk was heightened due to the risk of a Greek exit from the euro zone, and resulting full catastrophe. This is of course the market’s worst nightmare, because if debt costs increase across Europe’s most indebted nations, it might force the EU’s leading backers (aka Germany and France) to re-evaluate whether it’s worthwhile for them to continue carrying their cross. Thus, it could be the end of the euro-zone as we know it, or worse yet, the end of Europe’s united economy. That’s why stocks have been on the downslide up until now.
Wall Street is bothered by the Spanish 10-year bond rate above 7% today, up markedly from yesterday. If Spain cannot borrow at manageable cost, it will be in need of the same sort of rescue Greece keeps receiving. The problem here is of course that the Spanish economy is much more significant than the Greek feta foray version. Spain represents the world’s 12th largest economy in fact, but the disease would likely spread from there, which is terrifying Brussels today.
Italy is even more important than Greece or Spain, and while Italian 10-year bond costs hardly moved today, the nation’s just issued debt was sold at much higher cost. Italian 3-year bond yields were up more than a percentage point, while 7-year bonds almost reached a point higher as well. This is the worst case scenario that the world has sought to mitigate since the Greek crisis began. As a result, European shares were lower Thursday morning, with the Euro STOXX 50 Price EUR down 0.3% nearing the day’s close; but that was a bit better than the start of the day.
In fact, the Vanguard MSCI Europe ETF (NYSE: VGK), iShares MSCI Spain Index (NYSE: EWP) and the iShares MSCI Italy Index (NYSE: EWI) are each markedly higher Thursday. Even the Global X FTSE Greece 20 ETF (NYSE: GREK) is up 9.5%. Heck, the National Bank of Greece (NYSE: NBG), Coca-Cola Hellenic (NYSE: CCH), Hellenic Telecommunications (OTC: HLTOY) and Marfin Investment (MIG.AT) were all higher by large margin. So what gives then?
A bit of interesting news reached the wire over the past couple days, but it was largely overlooked by the market. The head of the disruptive Greek political coalition, Syriza, Alexis Tsipras, said that he would not lead Greece out of the euro zone. Well, that would seem to defuse the ticking time bomb, because the market’s greatest concern has been that Greek political change might change the course for Greece with regard to its European monetary ties. That’s exactly what speculative smart money is betting against today, sending these shares in what would seem counterintuitive direction, which is higher. That’s the direction I would advise aggressive investors to take as well to participate in what should be a super relief rally. I think the same is in store for the S&P 500, with the SPDR S&P 500 (NYSE: SPY) off 5.7% since the start of May. Guess what: it’s up Thursday morning and I’m looking for much more over the coming hours and days.
This is a forecast that runs against the tide, so I’m out on a limb. Give an unbiased strategist some respect for the guts to make such a call, and credit if my forecast proves true. Follow our blog for more insight and actionable advice.
Article should interest investors in SPDR Dow Jones Industrial Average (NYSE: DIA), SPDR S&P 500 (NYSE: SPY), PowerShares QQQ Trust (Nasdaq: QQQ), ProShares Short Dow 30 (NYSE: DOG), ProShares Ultra Short S&P 500 (NYSE: SDS), ProShares Ultra QQQ (NYSE: QLD), NYSE Euronext (NYSE: NYX), The NASDAQ OMX Group (Nasdaq: NDAQ), Intercontinental Exchange (NYSE: ICE), E*Trade Financial (Nasdaq: ETFC), Charles Schwab (Nasdaq: SCHW), Asset Acceptance Capital (Nasdaq: AACC), Affiliated Managers (NYSE: AMG), Ameriprise Financial (NYSE: AMP), TD Ameritrade (Nasdaq: AMTD), BGC Partners (Nasdaq: BGCP), Bank of New York Mellon (NYSE: BK), BlackRock (NYSE: BLK), CIT Group (NYSE: CIT), Calamos Asset Management (Nasdaq: CLMS), CME Group (NYSE: CME), Cohn & Steers (NYSE: CNS), Cowen Group (Nasdaq: COWN), Diamond Hill Investment (Nasdaq: DHIL), Dollar Financial (Nasdaq: DLLR), Duff & Phelps (Nasdaq: DUF), Encore Capital (Nasdaq: ECPG), Edelman Financial (Nasdaq: EF), Equifax (NYSE: EFX), Epoch (Nasdaq: EPHC), Evercore Partners (NYSE: EVR), EXCorp. (Nasdaq: EZPW), FBR Capital Markets (Nasdaq: FBCM), First Cash Financial (Nasdaq: FCFS), Federated Investors (NYSE: FII), First Marblehead (NYSE: FMD), Fidelity National Financial (NYSE: FNF), Financial Engines (Nasdaq: FNGN), FXCM (Nasdaq: FXCM), Gamco Investors (NYSE: GBL), GAIN Capital (Nasdaq: GCAP), Green Dot (Nasdaq: GDOT), GFI Group (Nasdaq: GFIG), Greenhill (NYSE: GHL), Gleacher (Nasdaq: GLCH), Goldman Sachs (NYSE: GS), Interactive Brokers (Nasdaq: IBKR), INTL FCStone (Nasdaq: INTL), Intersections (Nasdaq: INTX), Investment Technology (NYSE: ITG), Invesco (NYSE: IVZ), Jefferies (NYSE: JEF), JMP Group (NYSE: JMP), Janus Capital (NYSE: JNS), KBW (NYSE: KBW), Knight Capital (NYSE: KCG), Lazard (NYSE: LAZ), Legg Mason (NYSE: LM), LPL Investment (Nasdaq: LPLA), Ladenburg Thalmann (AMEX: LTS), Mastercard (NYSE: MA), Moody’s (NYSE: MCO), MF Global (NYSE: MF), Moneygram (NYSE: MGI), MarketAxess (Nasdaq: MKTX), Marlin Business Services (Nasdaq: MRLN), Morgan Stanley (NYSE: MS), MSCI (Nasdaq: MSCI), MGIC Investment (NYSE: MTG), NewStar Financial (Nasdaq: NEWS), National Financial Partners (NYSE: NFP), Nelnet (NYSE: NNI), Northern Trust (Nasdaq: NTRS), NetSpend (Nasdaq: NTSP), Ocwen Financial (NYSE: OCN), Oppenheimer (NYSE: OPY), optionsXpress (Nasdaq: OXPS), PICO (Nasdaq: PICO), Piper Jaffray (NYSE: PJC), PMI Group (NYSE: PMI), Penson Worldwide (Nasdaq: PNSN), Portfolio Recovery (Nasdaq: PRAA), Raymond James (NYSE: RJF), SEI Investments (Nasdaq: SEIC), Stifel Financial (NYSE: SF), Safeguard Scientifics (NYSE: SFE), State Street (NYSE: STT), SWS (NYSE: SWS), T. Rowe Price (Nasdaq: TROW), Visa (NYSE: V) and Virtus Investment Partners (Nasdaq: VRTS).
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Affiliated Managers Group, Inc. Ameriprise Financial Asset Acceptance Capital Corp. BGC Partners, Inc. Bank of New York Blackrock, Inc. CIT Group, Inc. COWEN GRP-A Calamos Asset Management, Inc. Coca-Cola Hellenic Bottling Co. S.A. ADS Cohen & Steers, Inc. DFC GLOBAL Diamond Hill Investment Group E TRADE FNCL Encore Capital Group, Inc. Epoch Holding Corp. Equifax, Inc. Evercore Partners Ezcorp, Inc. FINANCIAL ENGINES Federated Investors, Inc. Fidelity National Financial, Inc. First Cash Financial Services First Marblehead Corp. GAMCO Investors GLEACHER & CO Global X FTSE Greece 20 ETF Goldman Sachs Group, Inc. Greenhill & Co., Inc. Hellenic Telecommunication Organization, S.A. INTL FCSTONE Interactive Brokers Group, Inc. IntercontinentalExchange Intersections, Inc. Invesco Limited Investment Technology Group, Inc. JMP Group Janus Capital Group, Inc. Jefferies Group, Inc. KBW, Inc. Knight Capital Group Ladenburg Thalmann Financial Services, Inc. Lazard Class A Legg Mason, Inc. MGIC Investment Corp. MarketAxess Holdings, Inc. Marlin Business Services Corp MasterCard Cl A MoneyGram International, Inc. Moodys Corp. Morgan Stanley NASDAQ OMX Group, Inc. NETSPEND HLDGS NYSE Euronext National Bank of Greece S.A. ADS National Financial Partners Corp. Nelnet Inc. Cl A NewStar Financial, Inc. Northern Trust Corp Ocwen Financial Corp. Oppenheimer Holdings, Inc. Pico Holdings, Inc. Piper Jaffray Cos. Portfolio Recovery Associates PowerShares QQQ Trust, Series 1 ProShares Short Dow30 ProShares Ultra QQQ Raymond James Financial, Inc. S&P DEP RECEIPTS SEI Investments Co SPDR Dow Jones Industrial Average ETF Trust SWS Group, Inc. Safeguard Scientifics, Inc. State Street Corp. Stifel Financial Corp. T Rowe Price Group, Inc. Vanguard FTSE Europe ETF Virtus Investment Partners, Inc. Visa iShares MSCI Italy Capped Inde iShares MSCI Spain Capped Inde
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