On Friday, the S&P 500 rose 1.2% and Toronto rose 0.9%. This was due to optimism over a Greek debt deal. Almost all the stocks on our list rose. The Bombardier preferred shares were down 4.6% to $15.10. This would seem to suggest that “the market” views Bombardier as being in quite dire shape.
As of Sunday afternoon there is no Greek debt deal but it sounds like there may have been some progress except that the lenders are demanding that Greece actually pass the pension cuts and tax increases in their legislature before any money flows and even before the terms of the deal are finalized. I was under the impression that Greece had made some major concessions here and at this point a failure of the creditors to agree could basically cause riots in Greece. I have seen lots of material about Greece asking for $60 billion or so. What I have not seen is how much of that would be non-repayable. I understood Greece was going to ask for a certain amount of debt forgiveness. In any case all of this creates “volatility” in North America. My approach is to use the volatility as a time to add to positions as prices fall and not a time to sell in a panic.
Apparently most of Canada’s big bank economists are predicting and or calling for the Bank of Canada to lower interest rates on Wednesday. I find that ironic given that they were all so angry when the Bank made a surprise cut earlier this year. Why was the earlier surprise cut so bad but yet they want another cut now? I think these bank economists are most interested in simply being seen to have made accurate predictions. I hope The Central Bank does not cut interest rates and I don’t think it will do so this week.