European futures are trading flat after another volatile session yesterday. Traders are concerned about the standoff between Greece and its lenders and are watching these developments very closely. Any headline on this topic is causing a massive panic in the market. Perhaps, the biggest concern is if we are going to see the similar situation which took place back in 2008 when the federal reserve bank in the US let the Lehman brothers go bust and the domino effects followed that.
Perhaps this is what, the Greek finance minister was referring recently when he used the reference House of cards. The minister has raised his concern that if the country is pushed out of the euro, the rest of the eurozone will fall like a house of cards. Both sides are perhaps waiting who is going to cough first.
On top of this, we also had another fruitless reading out of China and this is making investors even more frustrated. The inflation data released in China has a silver lining for those who believe that the PBOC is more close to trigger the button for more quantitative easing. The QE has certainly become the ultimate drug for the market and traders are immensely addicted to it.
However, all eyes are focused towards the eurozone group leader’s emergency meeting and the hopes are that this could be the start of new negotiations between Greece and its creditors and both sides will be able to find a common ground. So far both sides are swinging their flags with their own agenda written on it and there is no room for negotiation. Greeks have been squeezed a lot so for if you look from their perspective as the debt to GDP ratio has only become worse since the country has adopted the austerity program. But, Berlin, insists that reforms and austerity do work and always ask them to look at Ireland, Portugal and Spain to get their inspiration.
Smart money is on side line for the time being and is waiting for the outcome of the above situation. If Greece does stay within the eurozone and do find a solution to their problems, investing in Europe could be the lifetime opportunity.
Disclaimer: The above is for informational purposes only and NOT to be construed as specific trading advice. responsibility for trade decisions is solely with the reader.