Yesterday’s massive run-up in the equities markets was something to behold!
According to the mainstream news media, the huge surge in stock prices was a reaction to the amazingly good news that the European countries had at last reached an agreement that will magically make the Greek sovereign debt crisis go away.
What was agreed to in Brussels is actually pretty vague, and there are considerable complications for the markets on both sides of the Atlantic as a result.
The European Policy Centre issued a statement late yesterday complaining that the deal “is very complex and difficult to evaluate. It lacks a number of crucial details which still need to be elaborated, it leaves numerous questions unanswered, and it is by no means clear whether the overall package will stand the test of time.”
Polish leader Donald Tusk agreed. “Everyone is impatiently awaiting the details,” he said. “But it’s not the devil that’s in the details, it’s all of Hell.”
For some big players behind the scenes, the fact that Greece hasn’t actually defaulted means that Credit Default Swap insurance policies can’t be cashed in. But because the Greek debt has now gotten a 50% haircut, those Swaps are now only worth half as much.
In other words, there are some people who are very, very unhappy with the same news that sent the markets soaring yesterday.
The message here? Yesterday’s buying frenzy was a massive knee-jerk reaction to news that not many people really understood, and the stage is now set for a huge move in the opposite direction.
Remember that the big Uranus/Hades alignment we’ve been watching so closely tends to bring equities prices UP initially, and then pulls the rug out from under them with a 7 to 30 day period after that.
So, if your long positions in the market went up in yesterday’s trading, this may not be a bad time to take some money off the table!