Greece Backs Down, Europe Exhales...for Now

The big macro can cause big moves in the market. What does today's headline macro news mean for your portfolio?

What's happening: Earlier this week, Greek Prime Minister George Papandreou scared the pants off the world by announcing a referendum vote on the latest bailout for his country. Today, he backed off the idea, while resisting calls to step down.

In plain English, please: The plan for the referendum vote was extremely worrisome for European leaders; if it didn't pass then the result would look like a disorderly default by Greece and, potentially, lead to the country's exit from the euro currency. The financial turmoil from that would have been a serious problem for the rest of the Eurozone, particularly Italy, Ireland, Spain, and Portugal, who are dealing with their own debt issues.

Papandreou's about face came after attending an emergency summit in Cannes, France, where understandably ticked-off leaders from Germany and France put on their bullying caps and told the Greek leader that the vote would determine whether Greece stayed in the euro -- a membership that is important to most Greeks. They also said they'd hang onto the next chunk of bailout cash due to Greece until after the vote takes place.

Stocks to watch: It's almost hard to say what stocks to not watch based on these developments. However, European banks, as well as U.S. banks that have concerned investors over European exposure, may be particularly worth keeping an eye on in light of this. That list would include National Bank of Greece (NYSE: NBG  ) , Banco Santander (NYSE: STD  ) , Barclays (NYSE: BCS  ) , Morgan Stanley (NYSE: MS  ) , and Jefferies (NYSE: JEF  ) .

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Fool contributor Matt Koppenheffer owns shares of Barclays, but does not have a financial interest in any of the other companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or Facebook. The Fool's disclosure policy prefers dividends over a sharp stick in the eye.


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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 03, 2011, at 3:52 PM, stan419 wrote:

    Nice article. But the one stock you may have missed is the National Bank or Ireland ( IRE). Once Europe strenghtens its financial position, this stock may make a strong rebound, possibly many fold as it has done in the past.

    Thank you.

  • Report this Comment On November 03, 2011, at 8:12 PM, richthegeek wrote:

    Wonder what tomorrow brings. Reuters has some scary articles. I feel like I just need to put my hands up and enjoy the ride. What a 'coaster!

    http://www.reuters.com/article/2011/11/03/us-eurozone-greece...

    Rich

  • Report this Comment On November 03, 2011, at 10:31 PM, TMFKopp wrote:

    @stan419

    Thanks and, yes, you're correct that IRE will swing on the outcome of the EU's handling of this crisis (though it's got a lot of issues of its own).

    The list above was just to highlight a few, and is definitely not an exhaustive list. There are an awful lot of stocks -- and financials in particular -- that really need to be pulling for a good outcome.

    Matt

  • Report this Comment On November 03, 2011, at 10:32 PM, TMFKopp wrote:

    @richthegeek

    ... what a coaster indeed...!

    Matt

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