|Dow||+154.67 to 18,140.44|
|S&P 500||+12.85 to 2,110.30|
|Nasdaq||+31.27 to 4,955.97|
|10-YR Yield||+0.02 to 2.133%|
|Gold||-$6.30 to $1,201.30|
|Crude Oil||-$0.88 to $50.95|
The end game is here in the epic fight between Greece and Germany.
On one side, you have a massive debtor nation with a long history of default. Greek Finance Minister Yanis Varoufakis has been leading the country’s charge to get debt and austerity relief.
He’s been asking for a six-month extension to Greece’s current financing program so the country can cover upcoming payments. But the radical, flashy and media-savvy official has rubbed most of Europe’s buttoned-up establishment politicians the wrong way.
On the other side, you have a creditor country that’s sick of writing blank checks to its profligate neighbors. German Finance Minister Wolfgang Schauble couldn’t be more different in his approach to negotiating and political leanings.
|Varoufakis and Schauble were reportedly at such odds, they couldn’t even sit in the same room.|
He has repeatedly refused Greece’s entreaties for debt relief, couching the debate in more moral and emotional terms. And he has had the backing of counterparts in the Netherlands, Finland and Austria, among others.
As a result, there was plenty of bad blood heading into today’s key meeting of Eurogroup finance ministers. Repeated, previous efforts to find a pathway to a deal failed … raising tensions to a fever pitch in Brussels.
The start of the meeting had to be delayed. Then Varoufakis and Schauble were reportedly at such odds, they couldn’t even sit in the same room! Other officials supposedly had to shuttle back and forth between the Greek minister and his German counterpart.
But this afternoon, European officials said a draft agreement to extend Greece’s bailout program was finalized. It will reportedly cover only four months, and will not have additional austerity measures. Plus, it will require more minute details to be worked out later — perhaps over the weekend or at yet another summit early next week.
That was enough to calm the market down, and lead to a sharp upside reversal in stocks and the euro currency.
|“In the end, we have to get used to periodic bouts of market volatility coming out of Europe.”|
I hardly know what metaphor to use to describe this deal, though. Can-kicking just doesn’t seem to do justice to what seems like the umpteenth extension of Greece’s debt lifeline. In the end, I think we all just have to get used to periodic bouts of market volatility coming out of Europe — and focus on the investments that are least vulnerable to them!
So what are your thoughts? Is this latest deal a sign that Europe finally has its act together? Or are we going to be back in the same place six or 12 months from now?
Meanwhile, did you happen to notice that the underlying economic data in Europe is actually starting to turn for the better … despite the best efforts of European politicians to screw it up! That would argue for a higher euro currency vis-à-vis the dollar, in the absence of more political bungling. So do you think I’m right to lean “short” the U.S. dollar, or not?
The Money and Markets website is where you can add your voice to the mix. So don’t miss the chance to do so tonight or over the weekend.
|Our Readers Speak|
Higher wages at Wal-Mart Stores (WMT, Weiss Ratings: B+) — THAT was the major topic over at the website in the last 24 hours, and boy did you have a lot to say about it!
Reader Deborah said there’s less to the announcement than meets the eye: “Really, Wal-Mart is raising wages? Are they also letting everyone know it will not really benefit the workers because the company is notorious for cutting back on workers’ hours to make up the difference? At least that is what my sources tell me.”
Reader R.J.F. added that the cost of rising Wal-Mart wages will be felt by everyone else, hurting the company’s customers: “The wage increases seem extreme compared to the recent annual increases given to folks on Social Security. Companies like Wal-Mart will simply raise their prices to negate the impact of higher wages. But this will hurt many people who shop there, especially those on fixed incomes.”
Reader S.H. argued that Wal-Mart isn’t doing this out of the kindness of its own heart. It’s doing so to save $$! The comments:
“I’m willing to make a small wager that this was a financial decision that saved Wal-Mart money. The cost of hiring and training people due to turnover is more than giving this raise and hoping for improved retention.
“They just have to raise prices a little and they have it covered. And due to scale and many other advantages, they will hold their competitive advantage. This is another PR stunt to make you think they are a caring company when in fact they are just saving themselves money.”
But Reader Mark praised the giant retailer for taking the step, adding that he’s a proud shareholder:
“Most of the wages will be spent in their own stores. I think they are doing the right thing. I own the stock, and I’m keeping it. This is a great move for the company and shareholders.”
Finally, Reader Terry M. noted that higher wages and higher profits don’t have to be mutually exclusive. Companies can afford to pay decent salaries, and still make money doing so! The comments:
“Many Silicon Valley companies have it right. Have the minimum wage be a livable wage and provide stock options for all employees. We should aggressively care about our employees for the common good of us all. No money in people’s pockets; no sales; no profits.
“Giving priority to the common good results in loyal customers. I know. I am on the board of Ben & Jerry’s. We pay a livable wage, are out in front on social issues for the common good, and are one of the most profitable ice cream brands in the world.”
Amen! Let’s hope more companies take that approach to business so all of America benefits. I’m tempted to go grab a pint of Ben & Jerry’s frozen yogurt from my local grocery store right now!
Anything else you would like to add on this topic? Then by all means, use the website as your outlet!
|Other Developments of the Day|
The Global Money War is heating up — this time with the Danish krone taking center stage. The country’s currency has been pegged to the euro for ages. But it has been appreciating sharply anyway because speculators have been betting the central bank won’t be able to maintain the link.
To fight back, the country threatened to implement capital controls. That caused the krone to collapse against the euro, falling by the most in any day since 2001. Following the Swiss shock a few weeks ago, this move only serves to underscore the rising volatility and increasing chaos that is part and parcel of the worldwide money war.
The Federal Trade Commission (FTC) is taking aim at a mega-merger in the food services business. It sued to block the acquisition of US Foods by Sysco Corp. (SYY, Weiss Ratings: B), claiming the deal would allow the combined company to dominate the business of supplying restaurants, hotels, and other companies with foods, beverages, and condiments.
Terrorists struck in two African nations today. Militants bombed a hotel in central Mogadishu, Somalia, then opened fire — killing at least eight people. Separately, multiple car bombs in the eastern Libyan town of Qubba claimed at least 35 lives.
Brrr! It was 38 degrees when I left the house this morning here in South Florida. But as cold as that may be around here, it’s nothing compared to the record lows seen all throughout the Southeast and Mid-Atlantic in the last 24 hours.
Heck, even Niagara Falls is almost completely frozen over! Darn groundhog and his six more weeks of winter!
If your fingers aren’t frozen, feel free to weigh in at the website with any comments on these stories or others you’ve read.
Until next time,