The BNN chase by Marty Cej:
There was a metaphor for Sunday's Greek election and the euro-zone debt crisis somewhere in Nik Wallenda's attempt to cross Niagara Falls on a tightrope later today, but now that he's wearing a tether to keep from plummeting to his death amid the mossy rocks and churning water below, it doesn't quite work. Greeks go to the polls in just two sleeps, as four-year-olds like to say, and will choose between the Syriza party, which has promised to rip up Greece's bailout deal with the European Union and IMF, or the New Democracy party, which backs the rescue package. It would be wrong to think that Sunday's election result will lead to immediate action of any sort. If Syriza wins, it will represent a Greek vote against austerity and a new process of negotiation will begin between Athens and Berlin, ahem, I mean Brussels. Yes, Brussels. Anyhow, the euro zone won't explode like a ceramic plate thrown on the floor; the next phase will be more Mexican standoff than Zorba, as Bill Blain, senior director at Newedge UK Financial told clients this morning. Bill joins us at 10:30 am Eastern.
To put the election into context, ECB President Mario Draghi said this morning that the bank was ready to step in and fund any viable euro-zone bank that gets in trouble, and painted a picture of a deteriorating economy with no inflation danger -- code for monetary easing. Japan's top financial diplomat, Takehiko Nakao, warned that authorities in Tokyo would respond to unwelcome currency moves as appropriate (ahem, intervention). The Bank of England followed up on Thursday's joint announcement with the government of a 100 billion pound offer of loans to banks by saying it will start next week with a charge of just 0.75 percent. And the Fed meets next week.
But what about playing the Greek election? What's the best strategy depending on the various possible outcomes? Does a clear mandate for Syriza raise the likelihood of more quantitative easing by the Fed and other central banks, which in turn depresses currencies and lifts gold? Maybe. Does a mixed outcome in Athens lead to the same result in markets? And what about a clear mandate for a pro-euro party? Does that ease economic pressure by reducing the probability of a Greek exit and diminish the need for more monetary easing, which could be good for the U.S. dollar, oil and copper and bad for gold? We may not be able to book Kreskin but we can still talk about probabilities and strategy. Suki Cooper, precious metals analyst at Barclays Capital will help us on the gold front this morning at 10:45 a.m. ET but there's a lot more to cover.
I would also like to hear from some portfolio managers who own European banks. Dutch and Belgian banks were just cut by Moody's and cuts for banks in the U.K., France and Germany are like in the weeks ahead. Are these banks -- some of the biggest and best-known in the world -- good value or value traps?
Ottawa and Michigan have finally come to an agreement to build a second bridge between Windsor and Detroit to help alleviate the most stuffed-up chokepoint in trade between the world's two largest trading partners. The deal may not result in a bridge being built, however, with opposition to the project from the Michigan legislature and the old-school political manipulation and maneuvering by the owner of the Ambassador Bridge who has somehow (cash) managed to convince politicians and some voters in southern Michigan that more trade running through their state is a bad thing. We'll talk today about what a second bridge could mean for the economies of the two countries in general and the economies of the two cities in particular. We also have to look at astonishing strategy and success of the Ambassador Bridge's owners to keep good sense at bay for decades.
We also have an interesting deal to cover today: the Hong Kong stock exchange agreed to pay almost $3 billion to buy the London Metal Exchange in a deal that gives Asia's largest exchange operator a commodity trading platform and brings LME members closer to China, the world's biggest metals buyer.
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