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Last week was marked by disappointing earnings reports across the board from Apple (NASDAQ:AAPL) and Facebook (NASDAQ:FB) to Starbucks (NASDAQ:SBUX) and Exxon (NYSE:XOM), yet the market pushed higher on news that ECB President Draghi will save the euro.

In some good news from overseas, the HSBC Markit China Flash PMI rose to 49.5 from 47.1 a month ago as a sign that easing measures implemented by the Bank of China are helping buoy the economy. The key in coming months will be to watch the New Export Orders for signs of holiday orders being placed. This will be an early gauge as to retail sentiment for the holiday shopping season. Strong orders indicate confidence that holiday sales will be good for the bottom line.

The Troika is back in Greece and confirming what everyone has known for a year now, that the government has shown no willingness to implement austerity programs necessary to cut spending and waste in the government. As a sign of how seriousness this has become, ministers are openly talking about Greece exiting the EU.

This is actually good news for the markets as it shows that the EU governments have taken the necessary steps behind closed doors to deal with the potential ramifications of a Greek exit from the EU. This means that there is likely to be less fallout than most people believe outside of Greece, where the exit will be traumatic. We are likely to see bailouts of selected banks within the EU banking sector similar to what occurred in Austria and Cyprus post bailout earlier this year.

Over in Spain, the debt bubble continues to collapse as the provincial governments are now looking for bailouts from Madrid. This will end up being the tipping point where the Spanish government will officially ask for assistance from the EU shortly. The difference between Greece and Spain, as both are in significant recessions with unemployment rates above 24%, is that Spain is actively taking steps to deal with its problems and Greece is not. The tipping point with regard to Greece for Europe appears to be the notification by Moody's that Germany's AAA credit rating was put on negative watch for a potential downgrade.

Karma is coming back to bite Argentina as forex controls put into place earlier this year begin to hamper economic growth. GDP declined by 0.5% in May and private reports have inflation reaching 24% pulling the economy into a deadly and dangerous stagflation.

The fear emanating from Argentina is that the government of President Kirchner may become unstable and lash out in an effort to deflect attention away from the problems. Earlier this year, the government of Argentina seized the YPF from Spain and implemented currency controls meaning that there is no telling what black swans may rise from the country if stagflation digs in its nasty claws. Argentina has yet to wrap up negotiations related to its debt default from more than 10 years ago, and given the events from earlier this year, the international community may not be so open to assistance this time around.

The fear of contagion may begin to spread across South America, with Brazil getting dragged down with Argentina. Both are significant trading partners and in the past contagion easily spread across the border to the northern neighbor. This will also force international investors to take a hard look at the other South American countries. The countries bordering the Pacific Ocean are better equipped to handle external shocks from Argentina as their trade is more focused on the Pacific Rim than their South Atlantic Ocean bordering counterparts.

Fundamentals are not holding together with the price movement in stocks. Slowing profits and economic growth are not a recipe for multiple expansion. The coming sell-off will be a very good thing. The crises in Greece and Spain are approaching breaking points, where they will have to be dealt with and resolved either by bailout or default.

The Chinese word for crisis -- "weiji," as noted above -- is made up of two characters, one symbolizing danger and the other opportunity. This symbol so eloquently sums up what is about to occur in the financial markets. The danger is that of a Greek exit, global recession, black swans from South America, and bank bailouts in Europe. The opportunity is to hedge your portfolio ahead of the sell-off and make a list of stocks to buy when the market bottoms. This character called "weiji" symbolizes what is about to occur in the markets.

Source: The Markets Approach A Crisis, Or 'Weiji,' Moment