5. Cracks In Sharing Economy
Market Update
Biggest CPI Jump in Two Years on Gas prices
sources: HiddenLevers, Pensions + Investments, CNBC, Bloomberg
1
3
CalPERS Dumping Outside Managers
2
6. Market Update: Shanghai Composite Tanks
14% drop in 1 week = Double Unhappiness
sources: HiddenLevers, WSJ, Bloomberg, ZeroHedge, Economist
4
worst week
since 2008
fueled by
margin
lending
average PE
64
8. #Grexit: Political Picture
sources: Gulf Times
Majority in finance now
accept Greek exit
Alexis Tsipras, Greek Prime Minister
"If Europe can’t handle a small
country like Greece, what’s it going
to do about Italy and Spain?“
Angela Merkel
Unwilling to let
Greece go
Finance Minister
Wolfgang Schaeuble
Accepts Grexit as
warning to others
9. #Grexit: Economic Impact on Europe
sources: HiddenLevers, MarketWatch, Highcharts, PWC
Greek citizens
prepping for exit
Greek Exit Small
Eurozone GDP Impact
European Banks
reduced Greek
exposure
Can’t get lower
10. #Grexit: Contagion Risk?
sources: HiddenLevers, PWC, Marketwatch
Only 23% of Greek debt
held by investors
As Greek yields rise, other
PIIGS yields stay down
Europe crisis contained if: ECB purchases PIIGS bonds
ECB keeps borrowing cheap for PIIGS
11. #Grexit: Euro Price Action
1st Greek Credit
Downgrade
25% Fall
in EUR
sources: HiddenLevers, BBC
18% Fall in
EUR
Credit Rating
Lowest in World Greek Return to
Bond Market -
3B Eurobonds
20%
Fall
in
EUR
1st Austerity &
Bailout Package
Greek Default
Summer Rebound
13. Scenario Update
Markets have priced in Grexit
- Euro rising while EU leaders bicker
- EU indexes rallying
- US markets unscathed but GDP impacted
Dysfunctional
Europe
ECB QE success PIIGS Waddle Through Euro Trashed
(same) (priced in) (euro now stable)
14. GOOD: ECB QE Success
source: HiddenLevers, WSJ
ECB actions lift European employment
green shoots
in Spain
16/20 EU
countries
positive GDP
EU GDP
better than
US/UK
15. NEUTRAL: PIIGS waddle through
DAX
rallying
Market indifference to Grexit now clear
source: HiddenLevers, Vox
S+P at highs
EURO
uptrending
ECB
purchasing
PIIGS bonds
16. UGLY: EU Recession
US rate hike
aggravates
source: HiddenLevers, ZeroHedge, Forbes, Press TV
EU
baby bust
Europe economic woes dwarf Grexit impact
France
record
unemployment
ECB QE can’t
created jobs
17. Scenario: Dysfunctional Europe
DAX
7750 -33%
DAX
10,500 -8%
DAX
13k +13%
key
lever
With Greece tragedy done,
ECB focus turns to job,
helping spread Spain green
shoots across PIIGS.
Indifference towards Greek
debt outcome continues,
evidenced by climbing Euro
and EU indexes.
EU GDP threatened from all
sides, including deflation /
demographics / US rates
increasing
Good
ECB QE
success
Neutral
PIIGS
waddle
through
Ugly
EU
recession
18. #Grexit: Take-Aways
ECB bond purchasing
fences in PIIGS
EU equities impacted by Greece,
US not so much
EU recession postpones
US rate hike
Euro downside now baked in
Do you hear the
words that are
comin’ out of my
mouth?
