Although Russia is no longer an imminent threat at disturbing global
financial market equipoise (see “No War in Year Four”), there is a
potential threat on the horizon. I’m
referring to the world’s most notorious red-headed step-child, a.k.a. Greece.
The Greek 20 ETF (GREK) is a proxy for Greece’s stock market. Note the plunge to new quarterly lows as of the
last few days in the following chart. As you
can see, GREK has been spiraling downward of late, which calls to mind the
state of the Greek financial market during the 2010 crisis.
A cursory search of news headlines emanating from Greece reveals virtually
nothing that would qualify as tinder for another round of global market
turmoil. The only possible exception is this Reuters wire story involving
Greece’s denial that it has instituted a retroactive tax on foreign holders of
Greek bonds. The rumor apparently caused
yields on Greek bonds to spike to a 2-year high.
A web site called the “Greece Reporter” also published
an article on Thursday which highlighted the fact that Greece’s economy was
still shrinking with GDP down 1.1% in Q1 2014.
The country’s unemployment rate is currently 27.4% according to the
article.
It has been some time since we’ve seen Greece in the news; you’ll
recall the country dominated news headlines a couple of years ago as the Greek
financial crisis spread volatility throughout the global market. Could it be that a revived Greek crisis (or
mini crisis) is imminent? The stock
market is the ultimate barometer of future business conditions and the GREK
chart suggests that something is amiss in the so-called “land of gods.” Stay tuned.
