Tags: Greece | bailout | Eurogroup | invest

Make Time Your Friend When Investing

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Tuesday, 17 Feb 2015 09:40 AM Current | Bio | Archive

The monthly U.S. retail sales numbers for January were, at face value, not stellar, as they fell on a monthly basis 0.8 percent after declining 0.9 percent in December. This surely doesn't reflect better consumer sentiment data as we have seen lately.

It's a fact that lower gasoline prices have distorted the face value data. To me, the good news remains that seasonally adjusted, retail sales came in at $439.8 billion, which represented a 3.3 percent increase from a year earlier. When we take out sales at gas stations and auto dealers, retail sales were up 0.2 percent on a monthly basis and increased 5.7 percent from a year earlier, which is certainly not worrisome.

Retail sales have their impact on GDP and in this context, next week we'll have the second revision for fourth-quarter GDP. The first estimate, on an adjusted basis, came in at 2.6 percent, which was substantially down from the 5 percent growth in the third quarter. I wouldn't be surprised if we see another somewhat softer GDP number, which wouldn't be catastrophic either.

Besides all that we still have the European Pandora box, where over the last couple of days, nothing has moved for the better. On the contrary, first we got the so-called negotiated ceasefire in the Ukraine, which should have halted the war in the eastern Ukrainian region, but that was, as expected, not respected from both warring sides. Second, and in the coming days probably the most important situation from a financial, but also from a political standpoint, is the Greek bailout restructuring talks that collapsed, as expected, in Brussels.

It was really interesting to see how Greek Finance Minister Yanis Varoufakis simply negated a draft statement requiring Athens to prolong the bailout and implement the economic reform requirements that were included and earlier agreed upon.

The Eurogroup's (eurozone finance ministers) draft statement that Greece refused to sign said that Greece would agree to a six-month "technical extension" giving time for "work on a follow-up arrangement" and added "the Greek authorities gave their firm commitment to refrain from unilateral action and will work in close agreement with its European and international partners, especially in the field of tax policy, privatization, labor market reforms, financial sector and pensions." In simple words, that was a no-go for Varoufakis.

The Greek finance minister at a news conference after his meeting with Eurogroup said: "I have no doubt that, within the next 48 hours [Friday is the deadline to reach a deal] Europe is going to come together and we shall find the phrasing that is necessary so that we can submit it and move on to do the real work that is necessary."

Dutch Finance Minister and Eurogroup Chairman Jeroen Dijsselbloem said: "The general feeling in the Eurogroup is still that the best way forward would be for the Greek authorities to seek an extension of the program."

In simple words, it all comes down to Greece formally asking for a bailout extension, which is what Eurogroup refers to as an extension of the running program that represents 172 billion euros ($196 billion) under the supervision of the IMF, ECB and the European Commission, and it is precisely that program the new Greek government promised in its official election program to reject.

As I have said before, the Greece situation could turn out as a real Pandora's box, with contagion to most if not all of the weak eurozone member states. Yes, this is a mostly unknown situation for most investors.

Anyway, I wouldn't take the whole uncertain situation, which includes the economic as well as the political aspects, lightly.

I could be wrong, but I have a strange feeling there could be change in the air that could be ignited by a lot of reasons.

I clear English this means that before I, as a long-term investor, would decide for the near term to commit to invest (surely not too heavy) in whatever category of market, one side (going long) or another (going short), I'd prefer to let the markets decide which way they want to go, which should be a completely different environment than the straightforward momentum period we have known in recent times.

I'd prefer to take "time" as my friend when I'd consider to invest.

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HansParisis
The monthly U.S. retail sales numbers for January were, at face value, not stellar, as they fell on a monthly basis 0.8 percent after declining 0.9 percent in December. This surely doesn't reflect better consumer sentiment data as we have seen lately.
Greece, bailout, Eurogroup, invest
714
2015-40-17
Tuesday, 17 Feb 2015 09:40 AM
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