Market Analysis

Bonds opened flat but are improving slightly in morning trading.  Stocks opened higher but have since turned negative.

In economic news today, the Producer Price Index (PPI) was down .1% vs expectations that it would be up by .1%.  Taking out food and energy though, the core PPI was up .2% which was higher than the .1% expected.  April Housing Starts increased to a 672,000 annualized pace vs expectations for a 655,000 number.  April Building Permits, however, dropped to an annualized pace of 606,000 vs expecations for a 680,000 level.

At this juncture no news is not good news in the eyes of those watching the EU crisis.  What is probably necessary to quell investor panice are a combination of  public statements by the leadership in Greece (and possibly the other PIGS) to the effect that regardless of the austerity measures required, they will take advantage of the lifeline thrown to them by the EU and will not default on their debt and also statements by the stronger EU members that they plan to stand behind the Euro.  While the press reports that some in Greece are suggesting they should abandon the EU and default (like Argentina) or restructure (like Uruguay), I would imagine that cooler heads in leadership in Greece are looking at the pain experienced by Argentina after they defaulted on their debt, with over 50% of the population falling below the poverty line, and will determine that the austerity measures are not so bad.  If you follow this link and scroll about 1/2 way down the article, you will see that at the height of the Argentine crisis their poverty rate exceeded 57%   http://en.wikipedia.org/wiki/Argentine_economic_crisis_%281999%E2%80%932002%29