Last week began with crosscurrents that made it hard to predict. See On Monday, It's China Versus Greece.
This week is starting with no such ambiguity. The Greeks had their vote and tossed a resounding "NO" at their European creditors. And the markets are not happy:
U.S. stock futures opened sharply lower Sunday night after the Greek people voted resoundingly to reject proposals from their European creditors. S&P 500 futures fell 1.5 percent in early trading after 6 p.m. ET (2200 GMT).
Once the magnitude of the Greek vote became clear, the euro began falling against other major currencies, and European stock futures sank (led by a 4 percent decline for the benchmark German DAX).
Because it's still early on Sunday, a lot of futures markets have yet to open. But when they do it will be with a bang. So expect, along with plunging European and US stocks, extreme currency swings, lower oil prices and surging equities volatility.
And then comes the real excitement. The Greek vote wasn't legally binding but it does free the country's leaders to stand up to its creditors, so expect some big threats to be tossed out on Monday. Here's a typically evocative headline from Zero Hedge: Greece Contemplates Nuclear Options, May Print Euros, Implement Parellel Currency, Nationalize Banks.
This is a story with legs, of course, but as always it's important to understand that Greece isn't the issue. It is to the global financial system what who takes out the trash is to an unhappily married couple: Not the big issue but a perfectly acceptable start to a catastrophic conflict. The real problems are in the quadrillion dollar derivatives market, the debt/GDP trends of five or six major countries, income inequality in the US and elsewhere, and the Chinese shadow banking system. Greece might be where it starts but those other places are where it will end.