February 26, 2010 Market Commentary By Art Cashin

Cashin’s Comments
AN ENCORE PRESENTATION

On this day in 224 B.C., a world-shaking event struck the Middle East. And, for a
change, it was not a battle nor a religious revolution. In this case it was just a
geologic world-shaking event - the type we call an earthquake.

It ruptured and demolished the statue of Helios which stood at the entrance of the
harbor at the then vibrant city of Rhodes. Crafted of bronze remnants of the war
machines of earlier military victories, this huge sculpture by Chares of Lindos was
deemed a wonder. In fact, it was nearly 12 stories high and became known as the
Colossus of Rhodes, one of the seven wonders of the ancient world.

Though it fell in only the 60th year of its existence, no one attempted to rebuild it.
Through the birth of Christianity and of Islam, it lay as a broken dream. Finally in 672
A.D., the then current rulers of the town sold it to a scrap metal merchant from
Edessa.

To celebrate buy a colossal drink for some misguided modern day mid-east potentate.
Explain that eternal glory is a tough thing to measure on current quantum-mechanics
space/time continuum. Then drop him off at the fallen idols junkyard.

The potentate who initially moved the markets yesterday was not in the Mid East. The
shaking came from Athens. And, it didn’t come for a potentate. It came from
political populism. Several Greek officials, perhaps motivated by the street unrest that
accompanied the general strike, opted to lash out at Germany as the embodiment of
those pushing for austerity in Greece. The result of that outburst was a plunge in the
Euro.

Coincidence Versus Causation And A Poorly Worded Headline – As just
indicated, some testy words from Greek politicians sharply heightened fears that a
rescue package might fail. The resultant plunge in the Euro combined with a surprise
jump in jobless claims to send stock futures sharply lower as the New York opening
loomed.

When the opening bell rang, it was followed by near panic selling. In the first twenty
minutes, the Dow plunged nearly 180 points. The markets spent the next two hours
milling about near those lows warily watching the dollar basket (DXY).
Around noon, the DXY began to pull back from the day’s highs (circa 81.13). Warily,
the stock market began to tick timidly higher. Initially little progress was made.
Then at 1:15, a Dow Jones headline hit. It seemed to say that the EU would not let
Greece default. That created an instant buzz on trading floors and trading desks. The
DXY pullback turned into a plunge. Stocks began to rally sharply in response.
While the reaction was undeniable, the headline it was based upon was somewhat
flawed. It turned out that the EU did not make the statement as the buzz assumed.
Instead, the headline was simply the opinion of an analyst at DB Advisors. But that
realization came only after the rally was a full throttle.

There was also an interesting example of confusing coincidence and causation as the
catalyst of the rally.
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