Greece: Alexis Tsipras plays to full houses – HegnarOnline

– The Greeks votes probably “yes” to the creditors’ proposal on the referendum on Sunday – the end of Tsipras, writes chief economist Shakeb Syed in Sparebank 1 Markets.

Syed think there is a large majority of Greeks want to remain in the EU and given that the Greeks realize that the referendum on Sunday, July 5 really is a vote on the “to be or not be in the EU,” it means that the Greeks will most likely vote to accept the creditors’ claims, he writes in an update Monday .

games for the gallery?
He notes that the EU possibly will present a new proposal to Greece at. 12 today and that Greece accepts this but adds that it will be a little strange if it does, when it already announced a referendum.

– But now not Tsipras government to be a government, but rather a theater, he said.

Syed think that next debt maturity, Tuesday, therefore most likely be breached and that a “yes” in the referendum will mean the beginning of the end for Tsipras government.

Syed think then that the current government will be replaced by a new government, composed of technocrats, who will not have a political agenda to resist creditors criteria. That means as well that further cooperation with lenders easier.

Uncertain until Monday
chief economist concludes that uncertainty will dominate markets until the referendum on Sunday and that it then (maybe before) will turn around.

For the stock market thinks Syed we’ve already gotten a taste of what we have expected, with the fall on the stock exchanges in Asia last night and this morning.

For long-term rates, he writes that we have already begun to see a typical typical flight to quality, with the result that German and US interest rates fall. Norwegian interest rates will follow suit, while yields in PIIGS countries will up.

In the currency market will also be aligned to quality, believe Syed, with weaker euro and stronger dollar. He could not exclude the stronger Japanese yen and Swiss franc.

– If Greece votes “yes” to the creditors’ criteria, as we believe, will reverse movements, says Syed.

The fear may increase in PIIGS
Syed also writes that the main creditors are the European Commission, ECB and IMF, which are government organizations and not private.

– A potential Grexit will therefore not have spillover effects via pure debt counterparty risk, but rather via sentiment channel. Therefore; a fear that Portugal or Italy (perhaps also Spain) could be the next to be out of the EU, which would boost risk aversion in the market, he writes.