Sunday, June 17, 2012

Will Greece's Election for Prime Minister Reduce Market Uncertainty?

Today, as Greek voters attempt to select a new Prime Minister, the winner will have to wrestle with 1) the country's significant financial problems and 2) citizens that seem reluctant to comply with austerity measures required under its financial bailouts. Expectations are that this is a “binary event”, suggesting that its outcome will have either very negative or very positive effects. It is assumed that G-20 leaders (who will meet in Los Cabos, Mexico on Monday to discuss global market instability and how to promote economic growth) will act to mitigate the damage if things get ugly

There has been significant media coverage on the implications of the Greek election, and its potential impact on the Eurozone and global financial markets. It seems that assessing which candidate will win the election and the implications associated with any potential winning candidate on global markets is a very speculative process.  Unless you are good at picking the result of a coin-flip, a short-term "wait-and-see" approach seems like a good short-term strategy.

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