Wall Street sometimes has a language all its own and that point was hammered home in a recent article in the Wall Street Journal (dated Tuesday, May 22, 2012) regarding some new terms being used to describe what is going on in Europe and more specifically, Greece, these days. I’ll try and summarize the new Wall Street language of Greece here, but see if you can catch other often used terms as well.
While the adage Sell in May and Go Away seems to be coming true, taking a Random Walk might better describe what is going on these days. The Misery Index is back in play and When the Tide Goes Out, All the Boats Sink theory seems to be working as well. Of course, the Summer Doldrums have yet to hit so maybe today’s Dead Cat Bounce might actually become a Rubber Band Effect and we’ll all feel better about our portfolios soon.
Greece certainly is not the only country facing serious fiscal issues but it sure dominates the news. Unfortunately, that means trouble in the markets. The current struggle is over the possibility of Greece pulling out of the Euro and whether that will spell doom to the currency and the Eurozone. In February, the smart folks at Citigroup coined the term “Grexit” to describe the possible pull out of Greece from the Euro. If Greece were to decide to pull out of the Euro, it is possible that they will take their time in doing so and may use a side, or parallel, currency to smooth the transition. This possible currency has been dubbed the “Geuro” by Deutsche Bank. This new currency might have to compete with the “Neuro” which may be a Northern European currency reflecting the stronger economies there. Other terms describing what is going on in Europe/Greece these days are “Eurogeddon” and “Acropolypse” neither of which we want to actually come true.
All kidding aside, how serious is the Greek issue? One has to look no further than Wall Street and see how the Dow has dropped almost 1,000 points over the last few weeks to see the impact it has. Even so, for an economy roughly the size of Massachusetts, is it making more of a splash than it should? According to recent reports, should Greece pull out of the Euro, the impact would be more of an embarrassment than an all-out financial disaster. Yes, banks (central and private) would face large losses but many of those losses have been priced in already. Perhaps the bigger fear is that the troubles in Greece are just a harbinger of what might lie ahead in Ireland, Spain, Italy, Japan, England, and elsewhere including the U.S. And there may not be a safety net large enough to cover them all. Sobering news as we go Bottom Fishing!
Maybe we should just all head down to State Street and enjoy a gyro. It just might help pull Greece out of their troubles!