European futures are are trading lower as there is still no common ground established between Greece and its creditors yesterday. Both sides drifted apart once again yesterday and investors were certainly surprised that this is the second time in the past 5 days that both sides are constantly collapsing in carrying out a fruitful results despite the fact that government finance is on the verge of collapse and this virus could spread really fast across other countries in the eurozone. The eurozone officials yesterday have made their final decision for now and the ball is in Athen’s court and they have until Wednesday night if they want to reverse their course.
This is no game of chicken and the only beat which we are playing on our drums to our investors is of extreme caution. A Lehman moment could repeat in the Eurozone if Greece virus does spread given that we do not have any strongly tested antiviral for this disease, however some officials do strongly believe that the food chain is much stronger If Greece does leave the Eurozone.
In terms of probabilities, chances are still very slim that Greece will be pushed out of the Eurozone however being naive or having an arrogant behaviour could be heavily punished. Therefore, staying hedge in our portfolio could be the best strategy for time being.
The economic docket is fairly full today and we will kick off with German ZEW survey today. Needless to say that a strong reading for German ZEW will support the view that the Eurozone’s engine has become resilient and give power to Germany to dictate around austerity and growth affairs in the Eurozone region. The forecast is for 55.4 while the previous reading was at 48.4