The Greek debt crisis has escalated this weekend and is being referred to by at least one financial analyst in Brussels today as ".. a pretty big mess right now." An emergency meeting of eurozone finance ministers broke down on Saturday when Greece's Prime Minister Alexis Tsipras requested an extension to his country's existing bailout program past a Tuesday deadline. This extension would allow Greece to hold a national referendum on July 5 to let voters decide whether or not the country should accept bailout aid under the current terms of Greece's creditors. While Mr. Tsipras and his popular anti-austerity Syriza party oppose these terms, many political analysts feel that Greek voters might accept them in order to prevent Greece's exit from the eurozone. The Greek people are clearly worried about the safety of their money as many stood in lines at banks and ATM machines last week and on Saturday to withdraw savings. The European Central Bank denied Tsipras' request to expand emergency funds to Greece but did not cut off support entirely, thus leaving room for more negotiations next week. To prevent a run on its country's banks, Tsipras and Greece's president Prokopis Pavlopoulos have declared next week a " Bank Holiday Break" when all banks will be closed and severe restrictions will be placed on ATM withdrawals. The Athens stock exchange will also be closed on Monday.
Needless to say, this "pretty big mess" is not good news for global financial markets worried about a possible Greece default and exit from the eurozone currency. As I've stated in recent blogs, a breakdown in Greek debt negotiations could send equity markets down, so we need to be ready to bail out of our long positions in the broad stock market next week if necessary, especially if the DOW starts to break below 17,700. A Greece default could also boost the dollar and push down precious metal prices. At the moment gold and silver charts are starting to look a little more bearish than bullish, so a deeper correction in these metals is a real possibility now.
This week should be an interesting one for all financial markets, and we will be especially alert and diligent in our trading.