Contemplating Grexit

The good news was that BHIT is going to be included in the blue-chip index LQ-45. Another good news was that there have been talks over whether the ESM will get a banking license which will enable it to tap into the ECB lending facility. Bad news were the placement of 17 German banking groups into NEGATIVE watch by Moody's following the placements of Germany, Netherlands and Luxembourg into NEGATIVE watch. There was also report that Citigroup has raised the odds of Grexit within 12 to 18 months to 90%.

As usual, the paradox kicked in as the markets eventually cheered bad news as good news. The worse the news, the more pressure will be thrown towards financial authorities in Europe and U.S. to do something. This applied to the slowdown in the new home sales data in June from 382K to 350K.

An interesting point came from Ifo Institute in Germany. Quoting from Reuters:

If Greece become insolvent and quits the euro zone, Germany should expect a loss of up to 82 billion euros, while if an insolvent Greece remains within the single currency bloc it would cost Berlin 89 billion euros, Germany's Ifo economics institute estimates.

Note that while Wednesday's closing level of the JCI was above 4K, the bearish outlook on the daily chart remains alive and well. We're definitely not out of the woods yet. Well, at least so far this Thursday morning the portfolio seems to be performing just okay...

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