Stocks Crater on Greece Fears

The S&P 500 Index fell 43.85 on Monday,down 2.09%,on worries that Greece might leave the Euro-zone,or might at least cause unfortunate ripple effects throughout the global economy.The country is expected to miss a Tuesday debt payment of 1.84 billion dollars to the IMF.Technically,that would not be a default,since the IMF payment does not have the status of a bond coupon payment,for instance.Still,it is plenty bad for the stock market,as is the unknown endpoint of Greece's tortured negotiations with its creditors,and the Sunday referendum basically on whether Greece should abandon the euro for its old currency,the drachma.
The run on Greek banks could become contagious,spreading to Spain,Portugal and even Italy.If that happens,the US economy,with its close ties to Europe,could suffer as well.
The market was shaken by S&P's opinion that the probability of the so-called Grexit is 50%,and a commercial default is inevitable within six months.Greece's credit rating was also lowered by S&P to CCC-.
Investors sought refuge in gold,which rose 0.52%,while Treasury bonds were basically flat and utility stocks fell less than the broader market.*
Utilities Select Sector SPDR ETF (XLU),Market Vectors Gold Miners ETF (GDX),SPDR Gold Trust (GLD),iShares 7-10 Year Treasury Bond ETF (IEF)

Westpac Exec:Why a Market Correction is in the Making

We're setting up assuming Sydney will become a renminbi trading hub,said Rob Whitfield,Group Executive of Westpac Institutional Bank.The November G20 meeting is absolutely an incentive to a free trade agreement with China.A China slowdown would slow down the economy.It would certainly affect our performance.*
I do see that we will really see a significant,meaningful asset price correction.Credit spreads are narrow,forcing a move by many into higher risk assets.Junk bond yields are at all time lows.Asset bubbles are emerging as share markets have posted successive record highs in recent times despite tapering and mixed economic results.It is my view that the current environment is ripe for a market correction that both looks and feels like what we experienced in 1994.At that time,US Treasury bond prices plummeted,causing the Fed to raise rates,which resulted in higher borrowing costs and a market correction.
Such an event need not freeze the credit markets this time the way the global financial crisis did,however.The financial system has been reformed since then.
The failures that perpetuated the recent crisis today no longer exist,Mr.Whitfield pointed out,and our ability to withstand shocks is much stronger.*
There's massive risk on the Scottish independence vote.A lot of the uncertainty has been priced in.Certainly there are lots of signs we've started to see a sea change with the US dollar,a big divergence between the US and the rest of the world.A lot of ugly ducklings are out there.It filters through the Federal open market committee on Wednesday-more event risk.There could be a lot of dollar-buying across the board,and Treasury-selling.If Fed chair Janet Yellen surprises it,the market will feel very disappointed.*
Westpac(WBK)

Should This Market Be Trusted?

Leading investor and musician Roger McNamee,co-founder of venture capital firm Elevation Partners,doesn't think so,he told CNBC's "Squawk Alley" programme today.A plethora of worries from the Ebola outbreak,to gridlock in Washington D.C. and geopolitical crises have affected Mr.McNamee.The rate of chaos is increasing a lot,and to me,that just makes me incredibly nervous,McNamee said.It changes how much exposure to the market I want to have.I don't understand how you can have so much chaos in the world and still have prices going up every day.I think this is a really important time for people to ask themselves how confident are they in the fundamentals of things they own,and how confident are they that there's a happy ending this year for the economy and the stock market.
For his part,Mr.McNamee has moved about a third of his portfolio from stocks to US Treasury bonds.*
Roger McNamee managed the top-rated Science and Technology Fund and co-managed the New Horizons Fund at T.Rowe Price Associates before co-founding Elevation Partners,a firm that concentrates on the interesction of Media and Entertainment with consumer technology.He also plays guitar and bass with the band Moonalice.*
T.Rowe Price Group,Inc(TROW)