by Dan Wiener | November 7, 2011 11:59 am
Last Monday was a humdinger, and all last week the markets were reacting. The big news, of course, was Greece’s Prime Minister George Papandreou announcing that he would hold a referendum on the euro zone bailout. To say that he threw the biggest monkey wrench into his own machinery would be a vast understatement.
Luckily, the Germans and the French basically told him that any more dilly-dallying essentially would mean the country would be booted from the euro zone and would have to go back to issuing drachmas, which of course it wouldn’t be able to do because the country would be bankrupt.
While Greece was courting bankruptcy, other news that roiled the markets last week was a real bankruptcy. Jon Corzine, the former New Jersey governor and Goldman Sachs (NYSE:GS) head, essentially made bets that were too big for the britches of his current company, MF Global (NYSE:MF). Now there are a few hundred million dollars that somehow aren’t well-accounted for. You and I aren’t institutional investors, but we still can learn a few lessons from this massive blowup:
Lost in all the turmoil was some decent economic news. Growth again seems to have slowed a bit, but employment has improved slightly (the economy added 80,000 jobs in October, while unemployment dipped slightly from 9.1% to 9.0%), and earnings remain strong. Interest rates, which had moved up as the fear trade kicked in again this week, have moved back down. The 10-year Treasury currently is at about 2.07%. Even there, the move in Treasury yields this year has been astounding, and the Vanguard Extended Duration ETF (NYSE:EDV) is up about 41% for the year through Friday.
As we edge higher, both the Dow and the Nasdaq are in positive territory for the year. None of the major foreign markets are up for the year, and some, like Germany’s DAX and many Asian markets, are down in double digits.
With Greece now on board with the bailout, and MF Global relegated to the pages of financial history (and possibly up for a Supporting Role Oscar in the sordid tales of Wall Street run amok), let’s hope investors begin to focus, for once, on the fundamentals. They might like what they see — I know that I do.
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