Stocks in Europe and the US rose last night even though the outlook for Greece remains clouded. Perhaps that performance can be explained by the sanguine outlook US money managers have about the outcome of the Greek referendum this weekend.
Reuters reported overnight that big US money managers believe that the Greek population will vote ‘Yes’ to accept the terms of the EU bailout program this weekend.
Reuters said they spoke to 21 US money managers across several asset classes, with 15 saying they expect a ‘Yes’ vote. It’s a small sample but that’s a comprehensive 71% for ‘Yes’ against the pools released last night showing the call is much more line ball with the ‘No” vote ahead.
Perhaps Greece’s politicians have a sense of the push for a yes, which in part may explain why overnight Greek prime minister Tsipras encouraged his fellow countrymen to vote no and finance minister Varoufakis gave 6 reasons why Greece should vote ‘No’ on Sunday.
But, it seems that money managers are taking the view that a ‘No’ vote will make things worse. They expect this to lead to a ‘Yes’ win.
David Kelly, chief global strategist at JPMorgan Funds, told Reuters “Things will get increasingly dire in Greece as the week goes on and if the Greek people vote ‘no,’ it will be a somewhat catastrophic situation.”
David Kotok, chief investment officer at Cumberland Advisors, agrees. He said “the arguments in favour of a ‘yes’ vote grow every minute the ATM machines don’t dispense money.”
Certainly that’s what the divergence between the pre-bank closure and post-bank closure poll results on the referendum released yesterday showed.
These are both sensible viewpoints.
But as we have seen over the past couple of weeks, the markets’ view on what will happen in Greece has swung wildly from euphoric expectation of a deal to despair after negotiations failed and the referendum was announced.
The situation remains fluid.
You can read the full Reuters story here.