Greek Debate Starts to Rise Again
By Dave Kansas
Greece has moved a bit off the radar in the past few weeks, partly because its debt has rallied sharply, the cost to insure against default has fallen and the general mood about Greece has improved a great deal.
Recall, Greece started the fire early this year when it confessed to a huge fiscal mess. Eventually, the European Union, the European Central Bank and International Monetary Fund had to step in with big bucks to assure folks that Greece would be looked after and the euro would survive the maelstrom.
Now debate is rising again.
J.P. Morgan remains bullish on the near-term Greece situation. The bank’s research group in it’s “trade opportunities for long-term investors” publications is still positive on 2-year Greek government bonds. JPM notes that the bonds have gained 3.25 percentage points since early August, “bolstered by suggestions that the EU/IMF support for Greece will be extended, and by further austerity measures and structural reforms. We stay long, as we think that the EU/IMF backing makes a Greek restructuring within the next two years highly unlikely.”
Carl Weinberg at High Frequency Economics, an independent research shop, is feeling less sanguine about the Greeks. In fact, he is downright edgy. He says: “Greece has published preliminary estimates of its fiscal performance for the first nine months of this year. These indicate that the government has exceeded its target for expenditure reduction handily, but it has fallen short of its target for revenues. Our understanding of the matter is that Greece has to hit both its revenue and expenditure targets to qualify for new money from the IMF. We do not know what to expect next.”
Despite his assertion, Mr. Weinberg does have some ideas of what will come next. He notes that revenue at 36.5 billion euros over the first nine months of the year is well shy of the IMF/EU “floor” for revenue set at 41.2 billion euros. He argues that barring special accommodation, it is difficult to envision how Greece gets the money it will badly need on Nov. 30, sparking another period of European market uncertainty.
J.P. Morgan notes that its Greek bond trade has done well, but it sticks with the bet. High Frequency has warned previously that the IMF/EU funding plan may not go smoothly.
Will he be right on the money this time? If so, we’ll have another round of Greek gifts just in time for Christmas!
Greek Debate Starts to Rise Again - MarketBeat - WSJ
, ma oggi non sembra proprio 
