NEW YORK (TheStreet) -- I really wish I had had time to write about the EU summit last week. The risk-on rally on Friday was spectacular, yet obviously a short squeeze rather than a real bullish turnaround, as evidenced by the significant retraction in all aspects in the week after.The EU summit agreement has four main points:
Assuming the eurozone manages to stay out of spotlight for more than a day or two, the markets would shift focus to the U.S. and Chinese economies, which again continue to struggle in limbo. In fact, continuing struggling in limbo is exactly my long-term outlook in both most of the world economy. In the U.S. and Europe, it's the demographic trend that no policy action can possibly compensate for; in China, it's the chronic build-up of over-capacity and the enormous challenges of migrating up the value chain. As I wrote on SeekingAlpha in the summer of 2010, we will look at Japan's lost decades with envy when we are in the middle of it. But given the very low expectation, I think the risk for this week is more on the upside. Shorts will be jumpy, fresh in the memory of the fear and panic on June 29. Although another short squeeze is possible if news is right (or wrong, if you prefer), the bigger danger to shorts is a slow death grinding up. This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.