Totally black ... statements in different European languages like "Porca miseria" or "Que horror" and a statement in Greek (what means "o god, that is the end"). Investors seem to be in a room with no light. In the article they describe the markets are in panic mode.
People, familiar with the sentix sentiment cycles know, that such words (panic) and pictures will be shown almost always near the end of a move.
Thursday, April 29, 2010
Wednesday, April 28, 2010
sentix-Special Survey Results
Greece debt crisis
Survey date: April, 28th 2010, 13:30 - 18:00 MESZ, 629 respondents
1) What is the likely endgame of the current debt crisis in Greece or what should be done to resolve it (multiple answer allowed)?
2. Will the steps taken solve the problem?
Yes: 20,9%
Yes, but only short-term: 43%
No: 36,2%
3. If a debt restructuring takes place, how much may the creditors have to write-off?
4. Which countries may face the same "destiny" like Greece within the next 2 years?
5. How do you think of Greek government bonds as an investment?
Yes: 67,1%
No: 32,9%
8. Rate the prospects of different asset classes within the next 3 months (1 = best, 5 = worst)
Now let us think what these answers of a representative panel of investors mean for the markets.
What's very interesting is, that the probability that a country face debt problems seems not to much related to the debt to GDP ratio (Belgium for example seems relative immune).
Also it is interesting that investment restrictions are not so common as I thought.
And a third finding is that a greek bond trading around 60% seem to have discounted the worst investors can imagine right now (which sounds interesting).
Survey date: April, 28th 2010, 13:30 - 18:00 MESZ, 629 respondents
1) What is the likely endgame of the current debt crisis in Greece or what should be done to resolve it (multiple answer allowed)?
2. Will the steps taken solve the problem?
Yes: 20,9%
Yes, but only short-term: 43%
No: 36,2%
3. If a debt restructuring takes place, how much may the creditors have to write-off?
4. Which countries may face the same "destiny" like Greece within the next 2 years?
5. How do you think of Greek government bonds as an investment?
- 75,4% don't touch it
- 1,6% have bonds and want to sell
- 10,4% have bonds and want to keep them
- 2,7% have bonds and want to increase the position
- 9,9% have no bonds but plan to invest
- 6,4% investments only in Bunds or Bundeslaender
- 11,6% only bonds from the Euro-core (Germany, France, Netherlands, Austria)
- 6,4% liquid markets (core + Spain, Italy)
- 9,2% everything without PIIGS
- 4,1% unrestricted without Portugal and Greece
- 62,4% no restrictions
Yes: 67,1%
No: 32,9%
8. Rate the prospects of different asset classes within the next 3 months (1 = best, 5 = worst)
What's very interesting is, that the probability that a country face debt problems seems not to much related to the debt to GDP ratio (Belgium for example seems relative immune).
Also it is interesting that investment restrictions are not so common as I thought.
And a third finding is that a greek bond trading around 60% seem to have discounted the worst investors can imagine right now (which sounds interesting).
Tuesday, April 27, 2010
The error of Mr. Papakonstantinou
"Investors, speculating on a default of Greece will lose their shirts", warns the Greece finance minister Giorgos Papakonstantinou last weekend. He thought that this will stop any speculative behavior againts Greece government bonds. What an error!
This kind of wording does not show the humility investors want to see from Greece, enforcing the belief, that this and any future government of Greece will be able and willing to make structural reforms and to pay down debt according to plan. Remember the speculation of George Soros against the pound. If the Bank of England could not weather market cycles.
Even if the IMF and the EU give support as expected, the real question will be, if Greece is able to refinance any debt in 2011, 2012 or beyond. At this moment, politicians in Germany and other EU member states may fear a Greece default more than a "bottomless pit". That may change if Greece is unable to change its financial culture. If you try to change your own behavior, for example to stop smoking, than you know how difficult it is. It is no wonder that the Greece public will resist. Expect the search for culprits or scapegoats as a step towards understanding.
The proposed IMF and EU bailout package is an easy solution and therefore not enough to change behavior in Greece in a sustainable way. So dont expect Greece government bonds to show a huge recovery even after an successful implementation of the rescue package. The best the EU can expect is a reprieve and a stop in speculation against Portugal or other "weak" countries.
This kind of wording does not show the humility investors want to see from Greece, enforcing the belief, that this and any future government of Greece will be able and willing to make structural reforms and to pay down debt according to plan. Remember the speculation of George Soros against the pound. If the Bank of England could not weather market cycles.
Even if the IMF and the EU give support as expected, the real question will be, if Greece is able to refinance any debt in 2011, 2012 or beyond. At this moment, politicians in Germany and other EU member states may fear a Greece default more than a "bottomless pit". That may change if Greece is unable to change its financial culture. If you try to change your own behavior, for example to stop smoking, than you know how difficult it is. It is no wonder that the Greece public will resist. Expect the search for culprits or scapegoats as a step towards understanding.
The proposed IMF and EU bailout package is an easy solution and therefore not enough to change behavior in Greece in a sustainable way. So dont expect Greece government bonds to show a huge recovery even after an successful implementation of the rescue package. The best the EU can expect is a reprieve and a stop in speculation against Portugal or other "weak" countries.
Welcome to my new place for ideas
For some years now, I publish behavioral finance and other research on the sentix website. But I found, that there is often not the room to engross some thoughts or to share some "woolly" ideas with our subscribers.
With this new blog I want to have a place for my thoughts, writing them down and hopefully discussing them with a lot if other interesting minds - with you!
This blog deals with the themes behavioral finance, sentiment analysis and financial markets trends. My perspective is mainly driven by investor sentiment, market price action and media analysis. I hope to provide some unconventional, sometimes provocative views. But never expect "unerring forecasts".
Despite the fact that my native language is German, I will try to post in English to have as many people discussing as possible. If you find any spelling mistakes (very likely) - please keep them private :-)
So let's start posting and commenting!
Manfred
With this new blog I want to have a place for my thoughts, writing them down and hopefully discussing them with a lot if other interesting minds - with you!
This blog deals with the themes behavioral finance, sentiment analysis and financial markets trends. My perspective is mainly driven by investor sentiment, market price action and media analysis. I hope to provide some unconventional, sometimes provocative views. But never expect "unerring forecasts".
Despite the fact that my native language is German, I will try to post in English to have as many people discussing as possible. If you find any spelling mistakes (very likely) - please keep them private :-)
So let's start posting and commenting!
Manfred
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