First it was Iceland, then came the PIIGS… This is of course the acronym for Portugal, Italy, Ireland, Greece and Spain…. although this is really an issue of PIGS front and center without considering Italy.  Greece is the standout issue that is the first or most dire due to its sovereign debt spreads widening out as rumors continue to mount that Germany and France are going to have to do an emergency rescue financing for that nation.  This has so far been denied, but it seems unlikely that Greece will be able to get its deficits that are now estimated north of 12% of GDP and many doubt the country’s policy of ‘tax and spend’ is the answer to anything other than adding to recession.  But there may be some hope that Greece is not going to weigh on the Euro and the EC forever.  After the US market recovered we have seen some select bargain hunting here or at least some recovery off the lows.

Greece is not an issue that will suddenly go away.  This will be an ongoing issue even if Germany and France bail the country out.  The issues are also part of the reasoning behind the strengthening dollar and ultimately may bring added risks to the Euro if they stay unchecked.  Still, we are seeing some nibbling today in the ADRs, ETFs, and Closed-End Funds that track these companies and countries. The buying is not massive nor are the gains, but we are seeing some recovery from lows and some small gains here selectively in our PIGS (again, ex-Italy).

The government has been accused of falsifying data about its public finances and allowing political pressures to obstruct the collection of accurate statistics.  In the past Greece could just arbitrarily devalue the currency and declare a ‘do-over,’ but that is not an option now that they are in the Euro.  In fact, the argument that this has happened throughout modern history is now of no relevance.  If you take the issues and make these a norm, it could even lead ultimately to a situation no different from kicking cast members off the island.

Dow Jones reported earlier that the spread between Greek and German bonds was narrowing with the 10-year Greek government bonds under 380 basis points versus a spread of about 405 basis points seen on Thursday.

Portugal

• Portugal Telecom SGPS SA (NYSE: PT) -0.4% at $10.39

In Ireland

• The Bank of Ireland (NYSE: IRE) -0.7% at $7.36
• Allied Irish Banks plc (NYSE: AIB) +3% at $3.60
• The New Ireland Fund, Inc. (NYSE: IRL) +1% at $6.93

Greek Stocks Are As Follows:

• National Bank of Greece SA (NYSE: NBG) +7.5% at $4.57
• Hellenic Telecommunications Organization SA (NYSE: OTE) flat at $6.96
• Coca-Cola Hellenic Bottling Company S.A. (NYSE: CCH) +2.3% at $23.07
• DryShips, Inc. (NASDAQ: DRYS) -1.4% at 45.73
• Diana Shipping Inc. (NYSE: DSX) -0.6% at $13.77

In Spain

• Spain Fund Inc. (NYSE: SNF) -1.6% at $6.93
• iShares MSCI Spain Index (NYSE: EWP) +0.6% at $43.79
• Banco Bilbao Vizcaya Argentaria SA (NYSE: BBVA) +0.05% at $15.36
• Banco Santander SA (NYSE: STD) +1.3% at $14.20
• REPSOL YPF SA (NYSE: REP) +0.15% at $23.78
• Telefonica SA (NYSE: TEF) -0.6% at $72.43

Where these ETFs, closed-end funds, and stocks close today is likely to depend upon how the US market closes and on the international headlines.  None of these gains are stellar nor do they signal any major betting bias that a recovery or resolution of the Greece issue will instantly recover.  But these are still better than some of the losses we have seen in recent days.

JON C. OGG

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