Macro Digest: Greek update and timeline

Good morning,

 

This is my macro commentary from late last night on the Greek election: Greek election: It's really up to the ECB and EU now

 

 

The comments is starting to come in but the most important thing to watch today is Eurozone Finance minister meeting:  

 

http://www.consilium.europa.eu/en/meetings/eurogroup/2015/01/26/

 

.

 

Timeline:

 

Today: EU Group meeting

February 28^th: Deadline for Greek austerity measures with Troika  (Stake: EUR 40 bln. in Emergency Lending Assistance for Greek banks)

March: Payment to IMF

End of June: Payment to ECB

 

Links:

 

Syriza win in Greek vote sets up new Europe clash (Via WSJ – must read)

Greek must bow to austerity or go bust, says EU (Via The Telegraph – must read)

Tsipras hat eine chance verdient (Spiegel online:  Tsiparas deserves a chance)

Tsipras: Die Troika is beendet (Frankfurtger Allg. Zeitung: Tsipras: The end of Trokia

Weidman warnt Syriza (Via Zeit online:   Bundesbank Weidman warns Greece)

 

 

Market reaction:

 

There remains a consensus that "things will be ok…" but the early comments indicate the positioning is already starting:

 

·        "It is clear that Greece will remain dependent on support and it's also clear that this aid will be provided only when it is in an aid program," he said in an interview with television broadcaster ARD. (WSJ)

·        A message on U.K. Prime Minister David Cameron 's usual Twitter account, meanwhile, warned that the Greek result will "increase economic uncertainty across Europe." (WSJ)

·        French president Francois Hollande hopes for close cooperation between Greece and France following Syriza's win in Sunday's elections in Athens. (AFP)

·        Germany's opposition Left Party l called the Syriza victory a "sign of hope for a new start in Europe." (The Telegraph)

·        Belgium's finance minister said there is room for negotiation with Syriza. Johan Van Overtveldt said on the eve of a eurozone finance ministers' meeting that "we can talk modalities, we can talk debt restructuring, but the cornerstone that Greece must respect the rules of monetary union that must stay as it is." (The Telegraph)

·        Spain's anti-austerity party Podemos hailed Syriza win with a dig at Germany. (The Telegraph)

·       Carl Bildt, the country's former prime minister and foreign minister, said: "Syriza in Greece has won the election by promising that taxpayers in other Euro counties will pay even more to them. Rather daring." (The Telegraph)

Ms Merkel has so been quiet and we need to see what Eurozone finance minister come up with.

 

Strategy:

 

Market reaction will move like the tide on comments from different vested interest from now on

 

Greece position is clear: They were given mandate to "ignore austerity".

IMF and ECB stance is clear there are room for talks on maturity and terms but no on substance and doubts about repayment

The EU, being the political animal it is, will look for compromises and short cuts, but end of the day this process is running out of time there are no new "pockets" to move the problem to anymore.

 

Greece needs a hair-cut anyone can see that – getting it and executing it is probably the biggest single challenge. Unlike what we are trained to believe often there are NO solutions to a lot of the problems we face – that's the real conclusion on last night election result.

 

 

 

 

 

Med venlig hilsen  |  Best regards
Steen Jakobsen  |  Chief Investment Officer

 

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