Trader Talk

It's Crunch Time on Greece

Jorg Greuel | Getty Images

Crunch time on Greece. A pause in the rally: Europe mostly weaker this morning, but only modestly, as traders wait word on whether there is a deal on Greece or not.

The euro dropped to the lows of the morning on headlines that Greek debt talks are likely to continue over the weekend.

Prime Minister Papademos, Finance Minister Venizelos, and Charles Dallara, head of the Institute of International Finance, are, we are assured, huddling as I write to come up with a deal.

The news is very fluid: Talk that creditors may agree to a coupon of around 4 percent, with varying maturities.

There's also talk of a "grace period" of about 10 years on the principal. Really. And they call this "voluntary."

The effect of all this: It seems the "real" haircut that will be agreed upon will be well north of 60 percent for creditors, not 50 percent.

The train is leaving the station. Greek officials have repeatedly said that the outlines of a deal must be approved today in order to be formalized at Monday's meeting of euro zone finance ministers. After that, it will take several weeks to get the paperwork done. The deadline is March 20, when a 14.5 billion euro ($18.5 billion) debt payment comes due. Greece, of course, does not have the money: It is dependent on the European Union/International Monetary Fund , which will not release money unless, among other things, there is a debt deal.

The euro is up 2 percent this week.


1) China slowdown: The HSBC China Manufacturing PMI for January came in at 48.8, essentially unchanged from December's 48.7. This is three straight months of below-50 ratings, indicating contraction.

2) General Electric: OK, not great. Down 2.3 percent pre-open on a penny beat, sales of $38 billion below consensus of $40 billion. The good news: GE Capital is clearly improving — management has signaled the division will announce a dividend later this year. Remember, GE hiked its dividend last month, to 17 cents — it now boasts a healthy 3.55 percent dividend yield.

3) Schlumberger shares rise nearly 1 percent in pre-market trade after posting fourth earnings per share excluding items of $1.11, beating the Street’s $1.09 estimate. The company warned uncertainty remains regarding its 2012 outlook as Europe’s sovereign debt crisis could pressure economic growth and oil demand forecasts. Late yesterday, Schlumberger's board voted to hike the company’s quarterly dividend by 10 percent to 27.5 cents a share.

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