Forbes' Joshua Brown writes: I was doing TV the other night
and when I mentioned Spain as being something to watch for this summer, the
host shut me down, saying “I’m bored with Spain.”
You don’t have to be interested in Spain, because Spain is
now interested in you, Papi. It’s fixing
to send a wave of disturbing headlines your way this summer whether you’re
bored or not. Here’s the playbook in
case you weren’t paying attention:
1. First something
crazy happens there – riots, protests, government shutdowns, whatever. 52% of Spanish youth are unemployed, the only
surprising thing is that they haven’t torn the place apart already.
2. Then Germany and
France make a big show about how they’re not bailing it out or in or whatever.
3. Then the other
ratings agencies downgrade it past the point of usefulness as Spanish sovereign
CDS blows out, bond yields climb and European equities are waterboarded. US stocks start to struggle with a rising
dollar, Treasurys knock on the door…
4. Everyone freaks
out and then the IMF starts running their mouths and we play the
headline-driven Risk-On, Risk-Off game again for a few weeks.
5. Bailout. US equities go wild to the upside again as
people come back to their senses and realize that things ain’t so bad here and
stocks are the only game in town in the end.
We end up going nowhere but we take the long road to get there.
Is this going to happen for sure? I don’t know, but I’m mentally preparing for
it….
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