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"I'm playing it very tight," James "Rev Shark" DePorre, founder and CEO of Shark Asset Management, said of Monday's market action. "I don't want to fight the strength, as that simply has not worked, but common sense suggests that we not be overly confident as the negatives keep piling up."
"We recommend you prepare yourself for both sides of a trade," cautions Ralph Fogel, a partner at Fogel Neale Partners.
The eurozone's 17 finance ministers meet in Brussels Monday to discuss the terms of a second bailout package, worth about 130 billion euros ($168 billion), for Greece from the European Union and the International Monetary Fund (IMF). If a debt deal for the country falls through, Greece would default on roughly 14.5 billion euros of bonds maturing in March.
Meanwhile, the country's private creditors, such as banks and investment firms, were reportedly coming closer to an agreement on a debt write-down deal for Greece, the success of which would be a pre-condition for the country's ability to receive its second bailout. The Institute of International Finance, a representative for the private creditors, reportedly remains cautiously optimistic about the negotiations.
Still, the private creditors said they've reached a limit on how much loss on Greek debt holdings they're willing to shoulder -- a lot is being asked of them. The request so far is that they help Greece reduce its debt burden by about 100 billion euros by swapping their existing bonds holdings for ones lower in face value by 50% and with far longer maturities -- extending decades into the future -- and far lower interest rates. The private creditors are so far taking greatest issue with Greece's proposed interest rates of as low as 3% for the new bonds. They think that a new rate of closer to 4.5% would be more acceptable.
Next Monday, European Union leaders are expected to discuss proposals to have the permanent and temporary European rescue funds run side by side, which would potentially lead to bigger defenses against the eurozone debt crisis and also protect countries such as Spain and Italy from defaulting on their debt.
Meanwhile, IMF head Christine Lagarde, said that the organization would require an additional $500 billion in funding to help create this additional protection as Europe increasingly takes greater responsibility for its own debt problems. "We need a larger firewall," Lagarde said in Berlin. "Without it, countries like Italy and Spain, that are fundamentally able to repay their debts, could potentially be forced into a solvency crisis by abnormal financing costs."
Lou Brien, economic strategist at DRW Trading, said that a stronger euro currency on Monday was behind the S&P 500's "pop" earlier this morning, but remains skeptical about whether this could be directly attributable to the latest developments in Greece. "There is more talk of big plans from Europe; but of course we have heard a lot of this talk before," he said.
London's FTSE finished 0.9% higher and Germany's DAX rose 0.5%. In Asia, Japan's Nikkei Average settled 0.01% lower. Hong Kong's Hang Seng index closed 0.84% higher.
Energy shares saw gains to offset Greek default fears as crude oil surged. The fuel rose after the EU agreed to suspend imports from Iran beginning July 1 in an attempt to force the Persian government to the negotiating table. The steps are part of an intensifying international campaign to pressure Iran's economy and discourage the government from pursuing nuclear ambitions.
March oil futures settled $1.25 higher at $99.58. February gold futures also rose, climbing $14.30 to $1,678.30 as increasing uncertainty pushed investors toward the store of wealth.
In corporate news,
Research In Motion(RIMM) said its co-CEOs, Jim Balsillie and Mike Lazaridis, have stepped down and been replaced by Thorsten Heins, the BlackBerry maker's chief operating officer. The resignations of Balsillie and Lazaridis come as smartphone users turn to devices made by
Apple(AAPL - Get Report) and
"There comes a time in the growth of every successful company when the founders recognize the need to pass the baton to new leadership. Jim and I went to the board and told them that we thought that time was now," Lazaridis said in a statement.
RIM shares surrendered 8.5% to $15.56.
Chesapeake Energy(CHK - Get Report), the second-largest natural gas producer in the U.S., says it may reduce output by up to 1 billion cubic feet a day after prices sunk to a ten-year low. Shares jumped 6.3% to $22.28.
The world's second-largest oilfield services company
Halliburton(HAL - Get Report) beat analysts' estimates for fourth quarter-earnings by 1 cent a share, announcing profit from continuing operations of $1 a share, excluding an environmental-related charge. The company reported revenue of $7.1 billion in the fourth quarter, up from year-earlier revenue of $5.16 billion. Shares lost 2.2% to $35.41.
Apache(APA - Get Report) said Monday it agreed to buy
Cordillera Energy Partners III, a privately owned oil and gas company, for $2.85 billion. Cordillera owns about 254,000 net oil and petroleum liquids fields acres in Granite Wash, Tonkawa, Cleveland and Marmaton plays in western Oklahoma and the Texas Panhandle. Apache shares rose 1.6% to $98.38.
The benchmark 10-year Treasury was falling 12/32, raising the yield to 2.071%, while the U.S. dollar index was falling 0.6% to $79.71.
No major U.S. economic reports were expected on Monday.
-- Written by Kaitlyn Kiernan and Andrea Tse in New York.
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