S&P Downgrades Greece

S&P has downgraded Greece to “selective default”, and said that the country would come out of default again if the restructuring went off successfully. Rather more importantly, Alphaville reports (http://on.ft.com/An9O5x) that the question of whether Greece has defaulted has been put to ISDA’s determination committee. The market seems to have decided that everyone is prepared for a default, but it is important to bear in mind that the triggering of Greek CDS could have unexpected consequences — as, indeed, could the default itself.

Germany Votes for Bailout

In spite of polls showing 62% of Germans opposed to the latest bailout, and media worries over a small number of contrary votes from within Merkel’s coalition, the German Bundestag has voted overwhelmingly in favour of the bailout package, with the SPD and Greens voting with the government. This coheres with my view that European elites are so committed to the European project that it would take a large and enduring shift in public opinion to alter their fundamental position. This is something that has not changed in the past couple of decades. What it means to be committed to the EU may have changed, and politicians may have changed in the extent to which they are cheerleaders for Euro-federalism; but the commitment to the “project” and instinct for “more Europe” among European policy elites have never gone away.

Next 11

Bloomberg reported yesterday that frontier market equities had recently underperformed developed markets. Much as I hate to let Goldman Sachs set the agenda, I have had a quick look at the YOY GDP growth of the “Next 11” countries — not quite frontier markets, perhaps, but off the beaten track. The figures are: Bangladesh 6.7%, Egypt 0.2%, Indonesia 6.5%, Mexico 3.7%, Nigeria 7.4%, Pakistan 2.4%, Philippines 3.7%, Turkey 8.2%, South Korea 3.4%, Vietnam 6.1% (figures from tradingeconomics.com). I do not know whether there is a clear opportunity in any of these places, but it struck me that one should know what their recent growth rates have been. Turkey and Nigeria stood out for me.


  • Pending home sales 25% b.e. Jan.
  • Japan retail sales 1.9% YOY b.e. Jan.

Next 24 Hours

  • Durable goods orders
  • Cash-Shiller
  • CB consumer confidence
  • Thomas Jordan speaks