7. Europe: Greece among PIIGS
sources: Eurostat, Eurostat, MarketRealist
Greek and Spanish
unemployment significantly
higher than others in PIIGS.
Greece saw more significant
GDP pullback than rest.
Greece - highest GDP debt ratio.
PIIGS – 2014 Monthly Unemployment
PIIGS – Annualized GDP Change
8. Europe: 2012 Bailout Comparison
source: HiddenLevers
Euro Draw Downs
Nov 2009 – June 2010
Oct 2011 – July 2012
May 2014 – ????
2011-12
Ended in Greek default
Commodities crushed
S&P unaffected
2014-15
QE initiated by ECB
S&P up up up
More Greek feistiness
Euro Crisis I Euro Crisis II:
Greek Default
Euro Crisis III:
Perfect Storm
9. Market Update – Ebola Pandemic
sources: Bloomberg, WSJ, Economist, Google Finance
Europe: ECB QE + US Markets Impact?
S&P Intraday Chart: 16-27 Jan 2015
Rumors of ECB QE in Print
Official QE Announcement
1.5% growth over 3 days
of QE announcement
10. Europe: Greek Exit Inevitable? Not really
Anti-austerity parties
won ~60% of vote
BUT:
In polls, 60% of Greeks
want to keep Euro
Paul Kazarian
(long Greek debt):
Greek Debt has been
cut already, is
sustainable
+
Alan Greenspan:
"I don't think it will be
resolved without
Greece leaving the
eurozone"
+
No consensus
+
Germans willing
to kick the can
sources: HiddenLevers, NY Times, Economist, BBC
11. Europe: Bottom for EUR?
sources:
6m
1999-now 10y
- USD
- ECB QE
- Greece
- Technicals
- CHF
bear flag
1.20 now resistance
sub 1.00 EUR is not crazy
13. GOOD: Bailout Success
source: HiddenLevers
Greece meets expectations. ECB QE crushes it.
EU leaders
concentrate
on growth
EUR topside
resistance at
1.20
No write off
for
Greek debts
14. BAD: PIIGS Waddle Through
Germany
keeps
kicking can
US decouples while EU gets hands dirty with debt.
source: HiddenLevers
No collapse,
but no EU
growth
US/EUR
reaches
parity
15. UGLY: Euro Trashed
New elected
leftists get
courage
source: HiddenLevers
EUR
breaches all
time lows
USD markets
and GDP
take hit
Euro falls below parity as Greece chaos unending.
16. Scenario: Dysfunctional Europe
€
0.75
-33%
€
0.99
-12%
€
1.20
+6%
key
lever
Greek reforms actually
happen. ECB can
concentrate on growing
GDP.
Germany give + take with
Greece on reforms, or
prolongs process. US
markets continue to ignore.
US equity markets correct
as global growth prospects
dim. Commodities crash
further.
Good
Bailout
Success
Bad
PIIGS
Waddle
Through
Ugly
Euro
Trashed
17. Dysfunctional Europe: Take-Aways
US GDP = 75% domestic Both Greeks + Germans
want Greece in Eurozone
EUR has further downsideGerman piecemeal solutions will
negatively impact EU growth
