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No Welcoming Party for Merkel
The Dow has spent the last week having trouble breaking through the 13,200 mark (S&P 1405) and today we're seeing the trade deflect off of it again. The jitters may be originating out of Europe (surprise, surprise), with eyes on Germany. Word has it there is another suit against the ESM bailout fund heading to the high court. The issue has already been brought up, leading to delays for Germany's eventual ruling on the fund. As of now, the decision would come on September 12th, but this new suit could push that back yet further. The problem is, there's already some worry that more problems can pop up in Spain, Italy and Greece before then, and the more Germany beats around the bush the more chance there is for one of these nations' time to run out (namely Spain) before they get the needed funds. You also get a sense that Germany may purposely be procrastinating to what ultimately comes down to them putting the most skin in the game to bail out everybody else's irresponsibility.
This new development may not be all that much of a coincidence either considering Europe's top dog, Angela Merkel, is back in town after a two and a half week vacation. That's significant because if you ask me she may be the most important person on the planet right now. There are no fliers, or party hats, or cakes waiting for her arrival today as far as the markets, Spain, Italy and Greece are concerned. Surely there are plenty of things in the European pipeline for her to shoot down, including Mario Draghi's grand statements about saving the Europe by all means necessary and fashioning a big bond buying program. As we know, Merkel has the most sway of anybody on these kinds of matters and the answer more often than not tends to be "nein."
Look out for the rumor mill to start back up, likely in a bad way, which it may already have judging by the market action.
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