Greek Crisis and Opportunity

Brian Hicks

Updated February 20, 2010

Welcome to the Wealth Daily Weekend Edition — our insights from the week in investing and links to our most-read Wealth Daily and sister publication articles.

It was another hectic week for Wall Street, as President Obama assured us that all was fine and the Greek tragedy continued to unfold…

We can understand why the Administration wants us to believe all is well. But to tell people that a second depression is no longer a possibility — and that the stimulus is responsible for saving two million jobs — is absurd, when 17.3% of the country is out of work.

As for averting a depression, we continue to hold onto hope. We’re stuck with mounting debt. We could get hit with higher taxes to pay for it… And Americans could continue to lose jobs and their homes. That’s the cold, harsh truth once you take off the rose-colored, Administration-provided glasses.

Many believe to solve the debt problem, tax hikes and spending cuts will be required… handing each of us a tab of $113,000, when you divvy up the bill.

You know as well as I do that most of us cannot afford that. And higher taxes will only force many Americans to tighten their belts more than they already have, possibly defaulting on the credit they’ve relied on for years.

So does this mean we’re bearish on everything in the economy? No.

These days, it’s not about being a bear or a bull. These days, it’s about being where the profits are — and if that means profiting from a downfall, so be it.

If you want to point a finger at carelessness, look no further than Greece.

You can imagine how "happy" the Germans were to find out that Goldman Sachs was helping Greece paper over debt with derivatives. According to Spiegel International, Greece’s willingness "to rely on cross-currency swaps devised by Goldman Sachs" was done to get around the Maastricht rules:

Under the Maastricht rules, according to CNBC, "EU member states’ budget deficits must not exceed 3 percent of gross domestic product (GDP), while public debt must remain under 60 percent. Press reports suggested that the swap arranged by Goldman allowed Greece to push its debt problems into the future."

The Greeks are realizing the party’s over… and Germany wants some accountability, demanding dramatic measures. According to opinion polls, some Germans oppose such a bailout, and Bild (Germany’s biggest selling daily paper) labeled Greece "as a nation of lazy cheats who should be thrown out of the euro on their ear."

Greece claims Germany should "pay reparations for their World War Two occupation before criticizing the country over its yawning fiscal deficits," and stop taking a "moral high ground."

Though, under pressure from the EU, the Greek government has outlined a series of public-sector wage cuts and tax increases intended to cut the deficit from 12.7% of GDP to an EU limit of 3% over the next two years. And, yes, it’s still too soon to buy Greek crisis stocks like the National Bank of Greece (NBG), says my colleague Chris DeHaemer.

The country is now facing the worst economic contraction since 1987, the last time they were stuck with government overspending. Unemployment is up 10.6% as of the end of last year. And the EU is giving them 30 days to get their stuff in order before they step in and do it for them.

And while this is going on, there are still more troubles in the Eurozone.

Who knows what will happen. Maybe the euro will collapse after all, sending the dollar to the moon and the markets to a shallow near-term grave. You can always pick up a dollar bull play, like PowerShares DB US Dollar Index Bullish (UUP), and ride it up. That’s how we’re hedging bets in Pure Asset Trader these days… and doing quite well.

Though, it’s best not to pay much attention to the Greek tragedy… unless you like watching paint dry.

Here are two other places to make money:

  • Wealth Daily Publisher Brian Hicks has uncovered the one uranium stock to own right now: Uranerz (URZ). He believes the demand for uranium never diminished, despite a drop off, and "We can now pick at the carcass… and buy quality uranium stocks for a fifth of the price they were valued at just two years ago. Given the push worldwide for cleaner energy, we think it’s a given that nuclear energy will be a growing component of the mix for years to come." 

Even President Obama believes that nuclear must be a part of the path toward sustainable clean energy, pledging $54 billion to build more nuclear power plants. In fact, just this past Tuesday, Obama announced a loan guarantee for a nuclear reactor project in Georgia, making this the first time nuclear reactors will be constructed on U.S. soil since the 1970s.

  • We’re also employing a new strategy in Options Trading Pit. While we’re still using Bollinger Bands, W%R and candlesticks to find long and short candidates, we’re now using biotech stocks and FDA rulings. And it couldn’t be easier… We’ve already cashed out with 50% gains on a Gilead Sciences (GILD) and wild gains on Dendreon (DNDN).

But we can do even better. Take a look at the potential with these types of trades: Xenoport (XNPT), for one, fell $13 on Thursday, helping return an amazing 610% in a day using March 17.50 puts. We weren’t in the trade, but that’s the potential we’re looking for. And our next biotech buy is coming soon.

Gains are much better with options. We’ve heard from some of you daily, asking how to trade options with the lowest possible risk. Which is why we just began teaching the ins and outs of options with our newly launched Options Trading Coach.

Stay Ahead of the Curve,

Ian L. Cooper
Wealth Daily

P.S. In case you missed any of the week’s top-read articles from Wealth Daily and our sister publications, you can catch up on them now:

The Brewing Pension Funding Crisis: When this Train Arrives, It’ll Run Us Over
Wealth Daily Editor Steve Christ explains why the unfolding pension crisis is about to swamp a few boats.

The Single Uranium Stock to Buy Right Now
: Uranium on the Rise as Obama Goes Nuclear

Publisher Brian Hicks explains what a pro-nuclear President means for uranium, and recommends a stock that should see gains of 100% — or better — by July.

Nuclear Energy’s Second Wind: How to Harness Energy’s New Picks & Shovels
Energy & Capital Editor Nick Hodge covers the recent surge in nuclear news and the one company about to capture growth on the fuel side of the business.

Rare Earth Shortage Looming: China has the Next Move
Wealth Daily reports on China’s plans to stop exporting these elements to the rest of the world by 2012… and how this move could cripple the rest of the world via the coming collapse of available rare earth metals.

Mining M&A to Double in 2010: Ernst & Young Forecasts $175 Billion in Deals
Editor Luke Burgess reports on Ernst & Young LLP’s forecast for 2010: the company believes the value of mergers and acquisitions in the mining industry may more than double this year.

DNA Vaccines: A Bull Market Just Beginning to Heat Up
One miniscule, all-but-ignored American bio-pharma firm owns the breakthrough that could soon render millions of deaths a thing of the past. WD brings readers the name of the company creating the vaccine that will turn your $5,000 investment into an easy $500K return.

Bakken Oil
: Being Wrong Never Felt So Good

Readers take a moment to reflect on how one simple error has made their Bakken investments wildly successful. In this free report from Wealth Daily, you can learn about one company that’s moving into the Bakken spotlight.

Renewable Energy Legislation: Legal Eagles Help Cleantech Stars Rise
Editor Sam Hopkins has met some legal eagles whose sights are fixed squarely on cleantech, and he explains why lawyers are imperative to the success of the sector.

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