Debt Reform and the Markets
By Laif Meidell, CMT, president of American Wealth Management, and portfolio manager of the AdvisorShares Meidell Tactical Advantage ETF (MATH)
Stock index futures traded lower in overnight trading beginning Tuesday evening following disappointing forecasts from a couple of bellwether technology companies.
Stock prices followed suit at the opening bell on Wednesday as investors punished the companies in question, then waited nervously for the next round of earnings reports to confirm or deny their fears. Among the major averages that fell for a second day on Wednesday, the Standard and Poor’s 500 traded lower by 0.24 percent and the Nasdaq Composite fell 0.70 percent on the day.
Though the S&P 500 is still in the positive over the last five trading days, that’s certainly not true of roughly two thirds of the global stock markets, which are negative over that time period. Aside from this week’s top-performing country, China, other countries near the top of this week’s research report all appear to have all something in common and it’s not geography.
This week’s top performers all seem to be many of those countries that analysts talk about in hushed tones when the topic of Greece debt reform comes up. Debt reform is fancy way of describing a reduction of the amount of money Greece would have to repay its creditors. The conversation goes something like, “Yeah, but if they don’t hold Greece’s feet to the fire . . . they will want their debt reduced as well, and where do you end?”
The countries I’m referring to are Spain and Italy, and this week they are in the No. 4 and No. 5 spots respectively, with the MSCI Spain 25/50 index higher by 1.448 percent over the past five trading days and the MSCI Italy 25/50 index up 1.441 percent over the same period. Maybe investors are hoping something good will come out the debt negotiations with Greece that will benefit other debt-laden nations in the eurozone as well.
This commentary originally published in the Reno Gazette-Journal. Performance numbers used in this article were obtained through eSignal and are not guaranteed to be accurate.