This page has been archived and commenting is disabled.

"Eurozone Breakup" Fears Soar As Fund Managers Now Think Probability Of Greek Deal Same As Default

Tyler Durden's picture




 

There were two notable developments in the latest BofA European fund managers survey. The first is that unlike recent months when everyone was convinced the latest Greek episode would have a quick and simple happy ending, now there is an identical split when it comes to expectations of what the fate of Greece will be with the same number of respondents (43%) saying a last minute Greek deal will be cobbled together to kick the can once again, as the managers who think Greece defaults (first to the IMF then to everyone else) but is not kicked out of the Eurozone. Only 15% still believe a full-blown Grexit is in the cards. BofA's comment appears superfluous: "We believe a peaceful Greek outcome is a necessary condition for a rally."

 

But while the optimistic bias is shifting, if slowly, one place where the "fund managers" are at least admitting that things are changing for the worse in Europe is their latest, June, estimation of the biggest tail risks. Here, while "geopolitical crisis" and a behind-the-curve Fed still remain in the top two "tail risks", at 21% and 20% respectively, just as they were last month, what is concerning is the third most prevalent fear which, at 18%, is a Eurozone breakup.

It is notable that one month ago this fear did not even register, suggesting just how fragile the Eurozone was and still remains, and that despite the constant central bank tinkering to infuse endless amounts of "political capital", said capital may just not be enough when the Lehman moments finally arrives.

Perhaps it is due to this jump in Eurozone concerns that BofA's properietary "cash indicator" level is now at 4.9% or the highest it has been in all of 2015. This is how BofA explains it: "As a reminder, the FMS Cash Rule works as follows: when average cash balance rises above 4.5% a contrarian buy signal is generated for equities. When the cash balance falls below 3.5% a contrarian sell signal is generated."

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Tue, 06/16/2015 - 10:08 | 6201498 Commodore64
Commodore64's picture

a lose lose situation :)

Tue, 06/16/2015 - 10:18 | 6201538 pods
pods's picture

Throw those pathetic Greeks out of Europe already!

Greek doomporn has run it's course.  I tap out.  Done, finis.

pods

Tue, 06/16/2015 - 10:32 | 6201590 yrad
yrad's picture

Uh huh... You will be spanking to the next Grexit article in no time.

Tue, 06/16/2015 - 10:38 | 6201566 two hoots
two hoots's picture

There is no good news in any of this?  A country with lots of debt is at/beyond default.  It's Wack-a-Greece time.

Meanwhile investors (including passive 401Kers) are slowly bleeding to death being distracted by Greece, Russia, Vatican, trade deals, useless candidates etc.

 

 

 

Tue, 06/16/2015 - 11:11 | 6201760 TwoHoot
TwoHoot's picture

two hoots a newbie shill. Don't be confused.

Tue, 06/16/2015 - 10:10 | 6201508 ShorTed
ShorTed's picture

TPTB will never allow a EZ break-up if they can help it.  Seems the EZ sheep, like the american sheep are going to wait until it's far too late before they fiigure the game out.

Tue, 06/16/2015 - 10:13 | 6201518 Commodore64
Commodore64's picture

Sheep are too busy grazing and watching the voice of whatever...

Tue, 06/16/2015 - 10:17 | 6201534 NoDebt
NoDebt's picture

The path laid before Greece and the EZ/EU is pretty clear right now.  Impose capital control to staunch the immediate bank run bleeding, continue kicking can several weeks or months at a time until the Greeks tire of Tsipras and replace him with somebody else.  Reset negotiations and try again.

Tue, 06/16/2015 - 10:24 | 6201561 kowalli
kowalli's picture

+100500

Tue, 06/16/2015 - 10:26 | 6201569 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

Even if the IMF/EU continue kicking the can, the local economy is collapsing in Greece. As the old saying goes, "You can't get blood out of a stone." The EU is going to suffer no matter what.

Tue, 06/16/2015 - 10:32 | 6201589 kowalli
kowalli's picture

local eCONomy is collapsing everywhere.

Tue, 06/16/2015 - 10:22 | 6201555 Dr. Engali
Dr. Engali's picture

Greece has been on the cusp of default for seven fucking years. Either shit or get off the pot, this is the longest dump I've ever seen.

Tue, 06/16/2015 - 10:26 | 6201564 BoPeople
BoPeople's picture

The US could not be conquered without Abraham Lincoln murdering around 750,000 residents of the various states (for which he was proclaimed a hero and the greatest president ever ... go figure). Hitler tried unify Europe the same way (and was initially proclaimed a hero). Now Schaeubel and the Germans are trying to do it again, but this time using fiat money as debt slavery.

People are generally opposed to being slaves, if they know they are slaves. The people in the US, even most very rich people (who are themselves slavers) are slaves to fiat money power.

At this point in time, the benefits of being slavers, for the elitist rich seem to be greater for them than the nagging thought that they themselves are indeed slaves. And so, they do the work of Mammon to enslave others and keep the human race weak.

Tue, 06/16/2015 - 10:29 | 6201577 A_latvian
A_latvian's picture

The Greeks will continue to be debt slaves of Zee Germans until the whole mess falls down. Those debts will never be repaid.

Tue, 06/16/2015 - 10:32 | 6201588 disabledvet
disabledvet's picture

25% interest is in fact a default. There is no "probability."

Compounding 25% means I make my principle back in well less than four years btw.

Not that any of this debt is for sale. So far quite honestly nothing is going on. The euro has rallied strongly, interest rates everywhere else but in Greece are at all time lows, growth over there is non-existent...blah, blah, blah.

I think Putin attacking does matter because they don't pay for their own defense in Europe...and haven't since 1945.

Can I imagine a Europe without people? Well...certainly Islam wants to move in.

Tue, 06/16/2015 - 10:44 | 6201630 ejmoosa
ejmoosa's picture

And one day we will finally see the managers believe that a breakup was inevitable from the start.

 

It's too bad we never hold anyone accountable for their bad judgement.  Instead, we bail them out for their losses.

Tue, 06/16/2015 - 11:40 | 6201944 bbq on whitehou...
bbq on whitehouse lawn's picture

Greece will get a deal, Spain will get a deal, Italy will get a deal and France will get a deal. All with the same drama. The show must go on.

Do NOT follow this link or you will be banned from the site!