The financial world is awash with theories as to how significant the Second Greek Bailout is. I’m far less concerned with this (the Bailout accomplishes nothing of import and only puts off the coming Greek default by a short period). Instead, I think it much more important to ascertain the true exposure to Greek sovereign debt. And what better place to start than the banking system of the one country that is playing hardball with Greece during this latest round of negotiations: Germany.
While prices did go higher in several cases, investors need to understand that we are nearer the end of the rally. Or at best, there might be a short term pullback in the works that lasts beyond 30 minutes.
Here is a good chart showing data from the weekly mutual fund flow of funds report. This series is using the domestic equity only data. In the first chart, we have plotted the flow of funds in it’s raw form. Though there has been a small recent uptick in funds coming in, note the strong consistent negative flow over the last couple of years.
Crude oil spiked to nine-month high primarily on investors fear of potential conflict over the escalating tensions between the US, Europe, Israel, and Iran. Right now, it seems Iran could be the one blinks first (war or peace).