European Inaction

I believe the market is set up for a  large advance as market participants are at extremely low equity allocations and corporations continue to buy shares. Unfortunately, the situation in Europe is hanging over the market. The  inaction by EU officials  is mind boggling.

The strategy of EU officials seems to be to pray that things get better. I don't think a Greek default would necessarily be a bad thing as long as a mechanism was in place to stop it from spreading. But officials cannot even agree upon that. I think the market just wants to know what is going on, be it a bankruptcy or a rescue.

2 comments:

Anonymous said...

Tsachy, is there anything the Fed can do to shield US from European debt problems? If yes, would they actually take that action?

Tsachy Mishal said...

There are 2 types of problems that can arise. The first is a domino effect collapse of the banking systems around the World. I dont believe that would be allowed to occur. The other fear is that a crisis in Europe can lead to a depression. There is not much the Fed can do about that.