The possibility of Greek debt default and the breakup of the European Monetary Union dominated headlines, but global equity markets rallied anyway. The S&P 500 was up about 5%. Communication from Germany and France indicated that Europe would commit to finding a way to support Greece, at least until an orderly default can occur.
- Tuesday – The leaders of Germany, France and Greece met via conference call to discuss the Greek bailout. Nothing definitive was accomplished, but France and Germany publically reiterated their desire to keep Greece in the Eurozone and Greece reiterated its pledge to push forward with austerity measures. Stocks were up sharply.
- Thursday – RealtyTrac announced a 33% increase in home default notices, indicating banks have again begun accelerating foreclosures. Unfortunately, it seems the housing market is likely to be hit with more foreclosures, not less, for the next 6-12 months.
- Thursday – Kweku Adoboli, a 31-year old trader for UBS, was charged for fraud after losing $2 billion of UBS funds in unauthorized trades. The arrest comes at a very bad time for UBS which is trying to win back the confidence of its clients and of regulators after a number of public missteps in 2008.
- Friday – The preliminary University of Michigan US Consumer Confidence reports rose to 57.8, above expectations.
We didn’t see anything particularly positive occur during the week, but real bull markets rise in the face of bad news or no news. The France/Germany/Greece meeting was sort of a non-event, but the market seemed to like it anyway, perhaps because nothing new and scary came out of it. The situation in Europe will continue to dominate the direction of the stock market and dictate whether much of the world tips into recession or not. One week in the market doesn’t mean much, but often stocks foretell the economic future, so a solid up week is encouraging.