Rooted in reality

To me, the headline of the weekend was IMF Managing Director Lagarde suggesting that this, the third bailout for Greece, should be rooted in reality. Only in Europe can hundreds of billions of other peoples’ euros be thrown at a problem before any mentions reality. Scary.

The only way to root a package in reality is to break EU rules and forgive billions in Greek debt, a step the creditor nations of the North are unwilling to take.

Nonetheless, Mr. Market is in a holiday mood, embracing risk despite Middle East woes, Greece hanging in the balance the day before a last-ditch summit and the US fiscal cliff still a significant hurdle despite last Friday’s happy talk from White House and Congressional leaders.

I’d suspect some good interest to sell on the approach of 1.2800/10 but imagine stops will loom on a break of that area. Demand is rumored toward 1.2730/35. Perhaps a range will rule the day.