Last week was options expiration week (equities and indexes). This is the week for market gaming as usually two things happen:
1) The Fed juices the market to provide additional liquidity to Wall Street.
2) Wall Street uses the additional liquidity to gyrate the markets to make sure as many options positions as possible expire worthless.
Today is Monday, which has become a rally day for stocks. However, there are several large negatives on the horizon.
The first concerns Greece. For three years now we’ve been told that Greece was “fixed.” It was not for the simple reason that you cannot fix a debt problem with more debt. There are only four ways to solve a debt problem:
2) Restructure (partial default)
3) Pay it off
4) Inflation (a default of sorts)
Greece cannot engage in #4 because, as part of the Euro, it cannot print its own currency. This leaves one of the other three. Thus far, the IMF, ECB, and EU Government have managed to avoid facing the music largely because Greek politicians have been willing to sacrifice their economy in order to remain in power. FULL REPORT