Even if the Greece crisis doesn’t turn into a major crisis for all of Europe and its banks, the economic implications are still signifianct, as Miller Tabak’s Peter Boockvar nicely spells out in a morning note:
Most European bond markets remain under pressure again. Whatever happens with
Greece now, the cost of capital is going up for most of the Euro region and that
has implications for companies and consumers that borrow in these markets.
Death, taxes and easy money, the only certainties in life. Actually the last one
is not always the case but REAL interest rates have been negative for 5 of the
last 8 years and the FOMC will tell us today that they will remain that way for
an ‘extended period.’ They will tell us that inflation is benign, even as the
Journal of Commerce index is up 9% from the last meeting at the highest level
since Aug ’08 and just 7% from a record high. There will be some coffee talk on
selling their large pile of MBS at some point. Unwinding the largest monetary
easing in the history of the world will not be easy and the longer the Fed
waits, the more rough it will be due to the misallocation of capital they have
created, again. II: Bulls 54 v 53.3, highest since Dec ’07, Bears 18 v 17.4
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