logic_man
Registered: Oct 2010
Posts: 1489 |
05-17-12 01:41 PM
Quote from spanish89:
I took a 9month holiday from trading from last autumn till yesterday.
When i left last autumn Italian bonds had just retreated after hitting 7%,
Greece had just agreed to a new bailout (after some media stunt where the PM backed out of the deal for a few hours),
all the markets had crashed down 15-20% over about 3months, but was finally settling down and Greece headlines stopped coming out.
I returned yesterday,
looked at the news over the past few weeks to try getting a picture of what the current economic news scene is and what the current major deadlines are for Greece.... ect
But am very confused as to why a Greece default and exit from the euro still is NOT priced into the markets??  
Everytime any headline comes out from Greece about them planning on rejecting the EU imposed austerity and so leaving the euro the markets all get shocked and surprised,
and then drop a few % in seconds!
But so why isn't Greece's leaving of the euro priced in yet?
Whats happened over the last 9months that ive missed thats causing this?
Well, new information is constantly coming out causing people to revise their forecasts and trade accordingly. It could be the case that this week's drop isn't even about Greece at all, but about Spain, Italy and other weak Euro members. Perhaps the info coming out of Greece is, due to correlations between Greece and those other Euro member states, driving down traders' estimates for what those states' economies will look like in the future.
If that's the case, your thread headline should be something like "Is it really true that the bad news out of Greece has future implications for Spain's, Italy's and Portugal's Euro membership and likelihood of default?"
When it comes to fundamentals, you have to think about the "ripple effects" of any specific news items, especially in an interconnected situation like the Eurozone.
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