'We are entering new territory here'

Oedipus Greek TragedyWikimedia CommonsOedipus At Colonus

Greece has voted “No” in a referendum on whether to accept the latest bailout terms from its European creditors.

So what happens next?

In a note to clients on Sunday afternoon, Brean Capital strategist Peter Tchir writes simply: “We are entering new territory here.”

The future for the euro, Greece, and what happens in the next day, week, month, year is all up in the air now.

No one really knows.

Tchir writes:

So what comes next?

I don’t really know. I have read about 10 different reports, laying out something like 35 different scenarios, and most seem unlikely at best, will take time to play out in any case, how markets will react to any given one seems difficult to estimate as well.

In a post on Sunday, Allianz’s Mohammed El-Erian wrote that we are likely to see markets sell off on Sunday night and Monday as a result of the Greek vote. But this market reaction would just be more or less a rehash of what we saw last Sunday and Monday after the surprising announcement 9 days ago that there would be a referendum.

Looking longer-term, Tchir — who has been all over the Greece story this week with some of the best commentary we’ve seen on Wall Street throughout the crisis — thinks that investors need to be wary of a number of risks in the market and recall the last time things were really dicey.

GreeceREUTERS/Javier Barbancho.A woman with Greek national flags behind her gestures during a demonstration in support of Greece, in Madrid July, 5, 2015.

The situation in Puerto Rico, the seeming collapse of the Chinese stock market, and the potential that the US economy isn’t as strong as we think are all things Tchir is looking out for.

But recalling the market’s favourite rhetorical question associated with big external events — “Is this a Lehman moment?” — Tchir thinks it’s wise to really think about what happened in markets back in the fall of 2008.

“Lehman was NOT a ‘moment,'” Tchir writes. “Lehman took over a week before the market really started to sell off.”

Tchir adds: “Since so many missed the opportunity to sell in the days following Lehman, look for the market to be more cautious as it tries to figure out what it might be missing… the general desire to buy the dip will be tempered by the realisation that Lehman took time.”

And so, sure, we’re likely to see an immediate reaction to the Greece news, but it’s worth keeping in mind that this will take time to work itself out.

As for what’s going on right now, follow all of Business Insider’s coverage here ยป

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