Market Analysis

Bonds are improved today and stocks down in response to the announcement by the Greek Prime Minister that there would be a referendum on the Eurozone deal announced last week which involved private creditors accepting a 50% loss and which would better fund the European Financial Stability Facility (EFSF) to provide funds at a lower cost to Greece and other troubled European countries while they work through painful restructuring of their economies.  The move by George Papandreou, the Greek prime minister, was probably a necessary one but one which should have been taken prior to the Euro deal being announced.  In public opinion polls, a majority of the Greek public oppose the bail-out because of the corresponding austerity measures that come with it.  It is very easy to be against the bail-out without saying what you are for or without acknowledging what the alternative is.  By holding a referendum the Greek people can elect to move forward as part of the European Union or to slide into the darkness that engulfs nations that default on their debt.  Once there is a public vote either way, Papandreaou can move forward with a mandate. 

In economic news today, the Institute of Supply Management's Manufacturing Index for October came in at 58.4 vs expectations for a 58.9 reading.  September Construction Spending came in up 2.% vs expectations for an increase of .3%.

In international economic news,3rd Qtr GDP in the UK came in up .5% which was better than expected.  In Asia,  Chinese manufacturing slowed in October but was still expanding.  Manufacturing activity slowed in Korea and Taiwan but increased in India.