Guest Post by Contributing Editor, Robert P. Seawright, Chief Investment and Information Officer for Madison Avenue Securities.
All of us who work in the financial markets have seen narratives like it thousands of times and said something like it ourselves almost as often. From Alan Abelson in the current Barron’s:
“THE STOCK MARKET TOOK A wicked hit in last week’s early sessions on revived fears that the negotiations might fall through to keep Greece among the living, or at least still a member, however green around the gills, of the European Union. Instead, holders of its bonds and other creditors blinked and Greece seemingly managed to survive sufficiently to warrant another bailout despite its incredible shrinking GDP. Markets the globe over, including our own, natch, breathed a huge sigh of relief.
“While the reprieve afforded by the announcement of the latest last-minute resolution enabled equities to regain a good chunk of the ground lost, the rally was notably lacking in the kind of combustible conviction that generates big trading volume. For one thing, Greece, shmeece, Europe is enmeshed in a recession, hopefully a modest one, but who knows?”
That’s a compelling narrative, but is it actually true? Continue reading