Germany Stomps Market Optimism: What You Need to Know

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The big macro can cause big moves in the market. What does today's headline macro news mean for your portfolio?

What's happening: Steffen Seibert, the spokesman for German Chancellor Angela Merkel, said that while there will be a plan to combat the European Union's fiscal problems introduced next week, it won't be a quick fix. Specifically, he said, "The chancellor reminds [everyone] that the dreams that are emerging again, that on Monday everything will be resolved and everything will be over, will again not be fulfilled."

In plain English, please: Is the Chancellor hoping to play a little "under-promise and over-deliver"? Or is she simply trying to bring hopes in line with reality? Either way, it's quite clear that she's making a strong effort to manage expectations for what will happen when EU policy leaders get together on October 23 to introduce a regional rescue plan.

With the S&P 500 Index (INDEX: ^GSPC) rallying 6% last week and the Dow Jones Industrial Average (INDEX: ^DJI) tacking on nearly 5%, it was clear that U.S. investors were getting very optimistic that the EU crisis could be stemmed. If we continue to use these indices as gauges of global economic optimism, then the comments out of Germany seem to be having their intended result; the S&P and Dow are respectively off 1.3% and 1.5% as of this writing.

Stocks to watch: Because this is such a massive issue impacting the global economy, the views on the EU crisis and the ability of the region's leaders to put together a workable plan that will avoid a massive blowup could be said to impact a high percentage of the publicly traded companies around the world and certainly has the power to move the indexes. However, banks will be particularly sensitive to this issue, so the stocks of regional banks like Bank of Ireland (NYS: IRE) , Lloyds Banking Group (NYS: LYG) , National Bank of Greece (NYS: NBG) , and Banco Santander (NYS: STD) could move significantly on new developments.

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