Stay Risk Off - Greece failed again to form a coalition Government

Because Greece failed again to form a coalition Government, they are going to have elections again next month, on June 17th, but most analysts and investors (including myself) believe that now than ever, they are closer to leave Eurozone and that the results on next month elections are going to be pretty much similar to previous one. Important to take a time to think what that would mean to Europe markets and countries, and of course consequently, to your financial investments and health. Even though Angela Merkel and new France President have both said they agree they want to keep Greece in the euro zone, the European Central Bank has already stopped providing liquidity to some Greek banks and millions of euros have already flew from Greek banks as well, Greece short-term foreign currency has been downgraded to “C” while long-term foreign and local currency has been downgraded to “CCC”. Country Ceiling has also been revised, which complicates much more their economic situation. Pay attention and take a risk off attitude for your financials safety.

Greece On Spot Again

Pay close attention to the next three days when left politician side of Greece will be struggling to form a new Government after the center-right failed to form a coalition last Sunday. Important to remember that the left side is opposed to austerity (as the new France President also is) and next days can be decisive to determine if Greece will or will not continue being part of the Euro Zone. Take care of your portfolio as impacts are already perceived.

Greece Parliament makes its homework but the bailout package is still under discussion!!

Greece Parliament was able to approve, late last night, the austerity package that includes, but is not limited to, thousands of Government jobs cut as well as cuts in minimum wages, pension funds and health care. Although that was a mandatory requirement for them to have approved prior to start receiving the more than USD 170BB rescue package loan, the Euro zone leaders are again discussing the details involving the loans amount and sustainability, which clearly does not put an end in the Greece bailout matters and show Euro countries lack of full consensus so far. Keep an eye on this discussion!!

Keep a close watch on Greece at least for the next 08 days

After Greece bailout and the agreement with Euro zone leaders about the austerity measures and the external supervision on Greece finance, the pressure in the market and Europe in general could breathe relieved. Is that true??? Well partially. For sure the agreement on releasing the bailout is a good news but we need to have at least three important subjects on our mind when thinking about our investment portfolio.

1) The first one is the fact that Greece has only about a week to approve and implement the austerity measures in order to be given the first part of the approved bailout. A fail in meeting this target would clearly shake the market.

2) Banks and financial institutes that had lent money to Greece will receive much less now than previously agreed and it was already noticed by the market in their stock values. Also they may stop paying dividends in a drastic case which would directly affect preferred stocks and/or bonds.

3) for Greece to be able to sustain the austerity measures and to promote growth in the future to their country, they would need the support and commitment of the all population, which is not happened right now (see example of Korea that lived similar situation in the past). So, in summary, even after the bailout, keep Greece in your mind and closely watch their actions, especially during this week, being conservative in your portfolio for investments that may be affected by their crisis.