This page has been archived and commenting is disabled.
Trillion-Dollar Asset Managers Warn On Greece Fallout: "No Blueprint" Means "All Kinds Of Uncertainty"
In “Beggar Thy Neighbor? Greece’s Battered Banks Beget Balkan Jitters” and then again in “Fearing Spillover, ECB Moves To Shield Neighboring Banks From Greek Meltdown,” we outlined the potential for the Greek banking sector meltdown to infect Bulgaria, Romania, and Serbia where Greek banks control a substantial percentage of total banking assets.
Despite the fact that yields on the country’s bonds spiked last Monday following Greece’s “Lehman weekend”, clearly indicating that investors were nervous about a potential knock-on effect, central bankers in the region rushed to their respective soapboxes to ensure the world (and local depositors) that the imposition of capital controls in Greece had no effect in the Balkans. Nevertheless, the contagion risk (at least in terms of bank runs by depositors who either rationally or irrationally fear for their cash) is very real, as noted by Morgan Stanley some two months ago. This was reinforced on Friday when Bloomberg reported that the ECB was moving to provide a backstop for Bulgaria in the event of a panic.
“It certainly appears as though the whole ‘Greece is contained’ line is yet another example of a vacuous attempt to calm a panicked public by issuing hollow assurances from on high and compelling the media to parrot them to the masses in order to obscure the real risks,” we said.
Indeed we got still more evidence that Greece does in fact matter this morning when Handelsblatt reported that according to Bundesbank chief Jens Weidmann, a Grexit would reduce the German central bank’s remittances to the finance ministry to zero, at least in the short-term.
And speaking of pernicious domino effects, we outlined in great detail just what a Grexit would mean for Europe on Saturday in “The Greek Bluff In All Its Glory: Presenting The Grexit ‘Falling Dominoes’".
Now, Greece’s fate in the currency bloc will be decided at the ballot box, which marks a fitting conclusion to the long-running drama that has bankrupted the birthplace of Western civilization. That is, Western democratic ideals emanated from ancient Greece so it’s only right that the fate of the country in the 21st century should be decided by popular vote. But however Greeks vote, there are very real consequences for financial markets across the globe as indicated by the multitude of examples cited above. With just hours to go until Western capital markets begin to react to the referendum results (due to come in sometime after 2pm ET), it’s clear that many asset managers are bracing for extreme volatility. Bloomberg has more:
It shouldn’t have gotten this far.
That’s the view of equity managers overseeing more than $3.7 trillion, who say the game of chicken between Greek Prime Minister Alexis Tsipras and creditors threatens lasting damage to a European stock rally that earlier in 2015 added as much as $2.17 trillion to share prices.
“The market right now hasn’t priced in a potential ‘no’ vote,” said David Joy, the Boston-based chief market strategist at Ameriprise Financial Inc., which oversees $815 billion. “If we get one, we’re going to see another round of downside volatility in excess of what we saw on Monday. The move would be more violent.”
The Euro Stoxx 50 Index tumbled 4.2 percent on June 29 and the Standard & Poor’s 500 Index had its biggest plunge in more than a year after Tsipras unexpectedly called for a referendum on austerity measures proposed by Greece’s creditors. Concern the vote may bring the nation one step closer to an exit from the euro pushed equity volatility to a three-year high.
“It would raise the question of the solidarity of the European Monetary Union,” Joy said. “If all of a sudden one member leaves, it does creates a precedent, and maybe suddenly casts some doubt on the long-term future of the monetary union.”
Stocks in Spain and Italy took the biggest hits in the week following the referendum announcement, dropping the most among developed markets with losses of more than 5 percent. A measure of stock swings for the region jumped 21 percent in five days. The Euro Stoxx 50 is now down 10 percent from a seven-year high in April.
So far, the market reaction hasn’t been as bad as in 2010, when Greece received its first bailout. That year, the gauge tracking 50 blue-chip companies in the euro area tumbled as much as 17 percent in less than six weeks. The crisis contributed to an 11 percent drop in the S&P 500 and a 16 percent plunge in the MSCI All-Country World Index.
“No one knows how to interpret a ‘no’ vote,” said Woehrmann, chief investment officer at Deutsche Asset & Wealth, which manages about $1.25 trillion.
“There is no blueprint for how a country exits the euro and redenominates,'' said David Lafferty, chief market strategist at Natixis Global Asset Management in Boston. The firm oversees $900 billion. "That’s going to create all kinds of uncertainty in Europe.”
In other words, Greece matters, despite the protestations of media pundits and central bankers.
The idea that a country can simply careen out of the EMU and in the process prove the currency bloc to very much "reversible" thus raising the specter of redenomination across the periphery without having far-reaching effects is naive in the extreme and represents a dangerously myopic view of capital markets.
One lesson the crisis of 2008 taught was that financial markets are far more interconnected than anyone cared to believe and you know what they say about those who do not learn from the past...
»
- 16465 reads
- Printer-friendly version
- Send to friend
- advertisements -
GREECE MATTERS!
:)
Uncertainty is what drives the human race forward. Certainty is nothing but death and decay.
Risk and its uncertain reward...drive folk.The "gamble" is built into the human DNA, especially the European DNA.
Forget the SHTF.
On Monday, the pre-open will look like fireworks shot into the shit-bucket. I think? ;-)
Looney
I wonder what US banks still have exposure to Greek sovereign debt?
Aaaaaaand It's Gone!
https://youtu.be/4TlPo0yCSa4
of course there is no bueprint for exiting...the whole Euro proposition was that you got Hotel California'ed once you're in. They knew that from the start. if they wanted an exit strategy they would have allowed some form of currency alternative.....
...and yes, of course there is uncertainty because once the hundreds of thousands of businesses and individuals comingle their finances (i.e. accounts payables, receivables, all future pricing, all future contracts, all mortgages, all credit cards, all car loans, etc...) denominated in Euros, the unwind...."unpredictable" no....it's not unpredictable, it will be chaos....
don't get me wrong...I'm the guy who wanted to buy a NO vote for today's ref. But the consequences for non-Greek businesses and banks who will take...giant haircuts on all forms of greek debt and business transactions....and Greek needs to do it write and give all their debt back! all of it....no arrears, no haircut...100% elimination of all Euro denominated debt in all forms.
THEN you start to rebuild.
0% debt to GDP has a nice ring to it.
"equity managers overseeing more than $3.7 trillion"
I feel so small... but aren't we all snowflakes?
Uncertainty ia what these Trillion Dollar Asset Managers Get Paid to Deal With.
Quit whining. Could be a career defining moment, LOL
Suck it up, Bitchez
YOU LOSE ONE TRILLION EURO'S!
SUCK ON THAT!
PIIGS out of EU...
..what is the exposure to all that debt being written off ?
How much debt do they carry that will be written off ?
Anybody know the number ?
Of course Greece matters
I posted before
If 350B € goes poof
In our current monetry system x that by 10 ie 3500B € will go poof!
Doesn't matter, they can print it up out of thin air. The only issue is the Elite don't want to give the people free money ever, they only give free money to themselves.
Uncertainty traders moving in.
You make money either way.
So STFU.
Of course the majority wasn't concerned when the credit tap was on full. Only when the credit tap was turned off. It's all the creditors fault. Germany, France, Spain, ECB, IMF. It's all their fault. They shouldn't have lent the credit. Perhaps so. They also have a lesson to learn. But don't tell me you didn't want the credit. Running successive deficits without cutting spending or raising taxes requires borrowing. That my friend, is the stupidity of the people who voted the stupid people in who carried on with the stupid policies.
Perhaps next time you will require the credit to be in gold. Pay back the interest with freshly printed fiat?
You realize that many of the players involved in this were NOT voted into office?
Do you think the common man and woman on the street knew that the bankers and bureaucrats lied to get Greece, Italy, and Spain into the Euro by hiding their debt in off books accounting? Things like listing stuff that was a liability as a revenue source? You think they voted for this and knew?
Really?
Greece was in trouble before joining the Euro, after joining the Euro, and if they leave the Euro they will also be in trouble. Perhaps this will serve as a lesson to not just the Greeks, but the ignorant fucks in other countries. Nope. Their money is still in banking system. A slave will be a slave.
So...sell gold, buy bureaucracy?
In the event of collapse, those who control the grain silos and arable land with water will rule.
Until those who control the heavy weapons show up.
Everyone else will be in big trouble.
Seems like a good deal to me. Lend gold to Greece, have them pay the interest in precious fiat. If they default, they keep the gold, and pay back the principal with freshly printed fiat. Oh wait. It's the other way around. Lend fiat, interest payments to be in gold. That is a model I could get behind.
They thought they were going to get what they wanted... Damned pesky reality.... https://www.youtube.com/watch?feature=player_detailpage&v=uTmfwklFM-M
What the world needs now is not love, but a global divorce.
It is long past time for the people to begin the hard work of living thru the turmoil of de-consolidation.
IF Divorce is good enough, progressive, and a better alternative for tiny entities like two people who have grown to hate each other, or even worse, have become totally disinterested in one another, alive or dead, then it is certainly the cure for entities like those in the Euro, as well as the so-called United States, and mammoth, global publicly held corporations, whose merging, acqusitions, and buying out of one another should be stopped by the SEC and cancelling proposed vertical or horizontal amalgamation like the recent one of Aetna and Humana, This kind of mating benefits ONLY the top 10% and that alone should be reason enough for government regulation that actually does what the Constitution and Bill of Rights says government should be doing.
The mere fact that they are inteconnected more than anyone cares to believe should be proof enough that it didn't work for the people, only the Oligarchs embodied in the Jewish Mafia around the world, and the better way is to have more independent entities, that will either live or die on their own.
What the world needs now......Kristallnacht 2.0.......out of chaos......will come order.Absolute order.
I guess these guys will have to work for a change.
Can't they just go and manipulate a few markets and make up any loss?
There was only one side playing "a game of chicken" or any game at all. The greek government have articulated clearly all along their stance. Perhaps this is what has thrown out of kilter the "players".
"[...] European stock rally that earlier in 2015 added as much as $2.17 trillion to share prices."
Well, something clearly "shouldn't have gotten this far", but hey, I'm not an economist.
No worries...if the DOW falls 2-3% tomorow, an Independent Greece will miraculosuly become the most important/positive element in the "free" world.....just BTFD!
All of these greedy Asset managers are just looking out for their own good. Let the market tank 30-40%.....only then will they change their ways........Greedy Fucks!
Those greedy asset managers are probably going to short the market and ride the profits on the way down...
If the final outcome is NO - I can't wait to watch all the ignorant bobble heads on CNBC and other stations in addition to our government "experts" try to gloss over this referendum and it's ramifications. THEY DON'T HAVE A FUCKING CLUE what is going to happen - AND - we have a whole damn week - no holidays - of pure pleasure watching everyone squirm with utter shock! FUCK 'EM ALL!
This is why America really needs to return to the Days of Yore when we had the "Town Crier."
"And so it is given from up high
FUCK THEM ALL!!!!
....
If the NO vote prevails, and I hope it does, then the one thing that IS certain is that the European "elite" will get a very well deserved serious poke in the eye.
Give a trillion, take a trillion. MF Global part deux.
?
And fuck fake stock market rallies too!
Amen Bonz.
I tell right now, if those poor fuckers voted no, in one mounth they will scream in agony in syntagma square to reverse the vote
The young riot much more effectively than the old.
And fuck your Berg, Stein, Cohen, et. al.
That picture on the main page looks like a double-helix screw. No matter which way you turn it, it continues to insert itself.
let's burn the shit house down!
In 3 days the USD might not be worth the paper it isn't printed on. Who gives a shit. Let it burn.
Brasilero?
Since they have accepted their first deal wayback there's been no blueprint to make it work in way it's been sustainable, so what's the difference?
Fiat currencies never last. There is no known exception, because its success depends on the honesty and probity of bankers and politicians. That should tell you all you need to know about the problem.
The solution is to buy the anti-fiat (hint: a shiny metal with no counerparty risk), prep for several years of painful adjustment, and hopefully we can emerge from the debt slavery the NWO control-freaks have foisted on us.
Thanks for that completely worthless commentary, David Lafferty.
We're all gonna.die!