If we could capture the noise of the markets today it would reverberate to the sound of rattles. Rattles being hurled from both the Greek and Eurogroup prams, and the rattle of sabres from Russia. And in the absence of any meaningful fundamental news it is these two scenarios which have taken centre stage today.
Today’s meeting in Brussels is a further attempt to reconcile the extreme negotiating positions taken by Greece and the EU over Greece’s unwillingness to continue with the much hated bailout conditions. One negotiating tactic adopted by Greece has been a suggestion the government turn to either Russia or China for financial assistance, something which has alarmed both the EU and the USA. The counter argument from the EU, and Germany in particular, is any failure to adhere to the agreements already in place could result in a Greek exit from the Euro.
Meantime running parallel to this meeting Angela Merkel and Francois Hollande are currently in Minsk in a further effort to try to resolve the Russia/Ukraine conflict. A conflict that began just over a year ago, but which has recently seen a surge in violence.
Against this fragile and shaky geo political landscape markets have been remained remarkable sanguine, almost taking the view the individuals in these two scenarios are resorting to a form of MAD (mutually assured destruction). However, whilst such a strategic stalemate can continue for the Russia/Ukraine conflict, no such stalemate is possible for Greece and a resolution will be forthcoming. In addition, it is interesting to note that Greece’s finance minister, Yanis Varoufakis, is himself an expert in game theory!
From a technical perspective the charts we need to monitor for any change to the current impasse are, of course, gold, the US dollar index, the VIX and bond yields, and I will uploading analysis of these later today.
By Anna Coulling
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