grexit webinar slides-06-24-2015
TRANSCRIPT
#Grexit24 June 2015
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Greek Tragedy – Last Act
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#Grexit
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MARKET UPDATE
Cracks In Sharing Economy
Market Update
Biggest CPI Jump in Two Years on Gas pricessources: HiddenLevers, Pensions + Investments, CNBC, Bloomberg
1
3
CalPERS Dumping Outside Managers
2
Market Update: Shanghai Composite Tanks14% drop in 1 week = Double Unhappiness
sources: HiddenLevers, WSJ, Bloomberg, ZeroHedge, Economist
4worst week since 2008
fueled by margin lending
average PE
64
HiddenLevers
GREEK TRAGEDY – LAST ACT
#Grexit: Political Picture
sources: Gulf Times
Majority in finance now accept Greek exit
Alexis Tsipras, Greek Prime Minister"If Europe can’t handle a small country like Greece, what’s it going to do about Italy and Spain?“
Angela Merkel Unwilling to let Greece go
Finance Minister Wolfgang Schaeuble Accepts Grexit as warning to others
#Grexit: Economic Impact on Europe
sources: HiddenLevers, MarketWatch, Highcharts, PWC
Greek citizens prepping for exit
Greek Exit Small Eurozone GDP Impact
European Banks reduced Greek exposure
Can’t get lower
#Grexit: Contagion Risk?
sources: HiddenLevers, PWC, Marketwatch
Only 23% of Greek debtheld by investors
As Greek yields rise, other PIIGS yields stay down
Europe crisis contained if: ECB purchases PIIGS bonds ECB keeps borrowing cheap for PIIGS
#Grexit: Euro Price Action1st Greek Credit Downgrade
25% Fall in EUR
sources: HiddenLevers, BBC
18% Fall in EUR
Credit Rating Lowest in World Greek Return to
Bond Market - 3B Eurobonds
20% Fall in
EUR
1st Austerity & Bailout Package
Greek Default
Summer Rebound
HiddenLevers
SCENARIO: DYSFUNCTIONAL EUROPE
Scenario Update
Markets have priced in Grexit
- Euro rising while EU leaders bicker- EU indexes rallying- US markets unscathed but GDP impacted
Dysfunctional Europe
ECB QE success PIIGS Waddle Through Euro Trashed
(same) (priced in) (euro now stable)
GOOD: ECB QE Success
source: HiddenLevers, WSJ
ECB actions lift European employment
green shoots in Spain
16/20 EU countries
positive GDP
EU GDP better than
US/UK
NEUTRAL: PIIGS waddle through
DAX rallying
Market indifference to Grexit now clear
source: HiddenLevers, Vox
S+P at highsEURO uptrending
ECB purchasing PIIGS bonds
UGLY: EU Recession
US rate hike aggravates
source: HiddenLevers, ZeroHedge, Forbes, Press TV
EU baby bust
Europe economic woes dwarf Grexit impact
Francerecord
unemployment
ECB QE can’t created jobs
Scenario: Dysfunctional Europe
DAX
7750 -33%
DAX10,500 -8%
DAX
13k +13%
key lever
With Greece tragedy done, ECB focus turns to job, helping spread Spain green shoots across PIIGS.
Indifference towards Greek debt outcome continues, evidenced by climbing Euro and EU indexes.
EU GDP threatened from all sides, including deflation / demographics / US rates increasing
GoodECB QE success
NeutralPIIGS
waddle through
UglyEU
recession
#Grexit: Take-Aways
ECB bond purchasing fences in PIIGS
EU equities impacted by Greece, US not so much
EU recession postpones US rate hike
Euro downside now baked in
Do you hear the words that are comin’ out of my mouth?
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