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Shadow opinion polls driving heady speculation
Greek law prohibits opinion polls from being released within two weeks of an election. That's left whisper numbers and reports of "secret" opinion polls to drive market sentiment. Such rumors of the anti-bailout party Syriza losing steam circulated yesterday and were enough to help push the Athens Stock Exchange up 10%! Speculation was especially rampant around Bank of Greece
What of the elections?
Speculations aside, here's what you need to know about the Greek election this weekend. Polls will be closed closed at noon EDT on Sunday. Exit polls will be released immediately, but with the latest estimates showing the New Democracy party (which supports measures to stay in the euro) and Syriza (the anti-bailout party) with one percent of each other, results could be well within an initial margin of error.
While markets will likely react in an outsized way on Monday depending on the results, barring an unexpectedly high turnout for Syriza that would give the party more clout in forming its coalition, the likely case isn't a quick exit from the euro. The more likely scenario is a situation where the European Central Bank continues payments to Greece while political parties in Greece -- likely led by New Democracy -- push back on austerity measures.
It's hard to believe, but we're likely looking at a pretty similar long-term situation in the country. Of course, that doesn't rule out yet another election in the country.
Other events to watch in the week ahead
The events in Greece could likely lead to several other domino effects. If Syriza does pull off an unexpectedly strong result on Sunday, Spanish yields would once again be on the rise. With yields on Spanish 10-year bonds closing at 6.92% yesterday, any negative news could push Spain's borrowing costs to the point where more Central Bank action would be needed to assist that country as well.
The Federal Reserve will meet on Tuesday and Wednesday, which should shed light on the likelihood of future stimulus from the Fed -- or an extension of Operation Twist. Also, leaders of the G20 nations will meet in Mexico next week, with Europe at the center of discussions.
Looking back to today's action, 25 Dow companies are seeing gains on the day. The largest gain comes from Microsoft
Take the long-term view
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