MorningWord 6/18/12: The build up into this past weekend’s election in Greece got me thinking yesterday about a Kink’s classic, This Time Tomorrow:
This time tomorrow where will we be?
On a spaceship somewhere sailing across an empty sea
This time tomorrow what will we know?
Well we still be here watching an in-flight movie show
I’ll leave the sun behind me and watch the clouds as they sadly pass me by
Seven miles below me I can see the world and it ain’t so big at all
Yesterday afternoon, as I contemplated the narrow victory for New Democracy, I had a hard time looking beyond what was to be a certain opening pop in overnight futures and figuring out how after the late week surge, equities would build even more momentum on what will at the very least be classified as an uncertain outcome for the future of Greece.
As of 9:10am, the S&P futures are down about 1.25% from the opening tick and practically trading at the lows of the session. Asian indiceis were the primary beneficiaries of the news with the Nikkei closing up 1.77% and the Hang Seng up 1% (possibly playing catch up to our strength on Friday).
European markets have been on a bit of a roller coaster ride as the DAX is now flat on the day reversing all early gains, the Euro reversed lower off of levels not seen since May 22nd, and yields on the Spanish 10 year are blowing out to new all time highs, well above 7%.
In his MacroWrap this morning, Enis very succinctly laid out what he deems to be some warning signs for global markets, that have very little to do with yesterday’s elections in Greece. We see storm clouds massing overhead, and we want to try to separate the forest from the trees a bit as we head into the end of the second quarter and when U.S. corporate earnings should start to take focus. But first we will have to get through a couple of days of speculation as to what sort of stimulus the U.S. Fed is likely to drop on us at their meeting Wednesday. Anything short of an extension of Twist will disappoint equities in our opinion, and frankly after Bernanke’s speech to congress a couple weeks back it doesn’t seem that likely with the SPX around 1340, up nearly 7% on the year.
So to answer the poignant questions This Time Tomorrow, where will we be, and what will we know? Unfortunately the answer is hard to swallow, but much less than bulls had hoped for yesterday.
darjeeling limited – kinks “This Time Tomorrow”