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发帖数: 5516 | 1 How to profit from the coming Greek default
By Matthew Lynn
LONDON (MarketWatch) — You don’t exactly need a crystal ball to know what
the biggest event in the financial markets of the next 12 months is going to
be: Greece defaulting on its debts.
This week Standard & Poor’s cut its rating on the country to CCC, the
lowest of any nation in the world. Only last week we learned that Greek
industrial production was down 11% year-on-year. Unemployment has risen 40%
over the past year, and now stands above 16% nationally. A year on from the
European Union and International Monetary Fund “rescue,” Greece is
slipping into 1930s-style depression.
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Everyone knows Greece will default, writes Matthew Lynn. Here are five
trades to take advantage of the euro's ensuing collapse.
A country in that kind of a fix doesn’t pay back debt. Nor does it get its
deficit under control. It isn’t a question of whether Greece defaults
anymore. Everyone accepts that. It is simply an issue of when, by how much,
on what terms — and, perhaps most crucially of all, who gets stuck with
paying the bill.
Forget all you’ve read about it being a catastrophe for the markets when it
happens, however. Only things that nobody really forecast make prices move
in any dramatic fashion. A Greek default is about as unexpected as Rafael
Nadal making the finals at Wimbledon this year.
In reality, it is already priced in. And the Germans and the French aren’t
going to let it happen until they know their banking systems are safe — so
there isn’t going to be a Lehman-syle collapse.
What a Greek default will do is focus everyone’s mind on the breakup of the
euro. Once countries go broke, the euro will have taken a decisive step
towards dismemberment. The markets will start figuring out who the winners
and losers are from that — and pricing that in as well.
So if the euro isn’t going to be around in five years time, how do you
position your portfolio for that?
Tourism in the Greek islands should flourish once the euro falls apart.
Here are five trades you should start thinking about:
1. Buy German bunds, and sell the DAX index /quotes/zigman/2380246 DX:DAX -1
.25% . The new deutsche mark that will emerge from the wreckage will be one
of the strongest currencies in the world. That will be great for German
bonds, but bad for the country’s mighty exporters, whose shares are the
leading constituent stocks of the blue-chip DAX index. Over time, German
companies will learn to adjust to having a strong independent currency again
. They coped with it perfectly well in the 1970s and 1980s. But it will take
time — and exports will suffer in the meantime. That will be bad for
profits, and bad for share prices.
2. Sell the Swiss franc /quotes/zigman/4868123/sampled USDCHF +0.89% .
Investors have been piling into the franc because they don’t have the
deutsche mark as a safe haven anymore. The Israeli shekel /quotes/zigman/
4867989/sampled USDILS +1.41% has some supporters — including this writer
— as a currency that’s going to appreciate through bad times as well as
good, but it doesn’t have a thousand years of peace and prosperity behind
it the way the Swiss franc does. So right now the Swiss have that market to
themselves — as the strength of the franc makes clear. But with the
deutsche mark back in business, a big chunk of that safe-haven money will
shift back across the border. The Swiss franc will be on the way down again.
3. Sell the Belgium index /quotes/zigman/627399 XX:BEDOWD -2.09% . As the
European Union grew in power, Brussels emerged as the capital of a nascent
super-state that for a time seemed able to rival the United States. Every
big company needed a platoon of well-paid lobbyists taking people out for
expensive lunches. With the euro on the rocks, the EU will be halted in its
tracks, and all of that will disappear. Brussels will just be a place where
you can buy some nice chocolate while changing trains. The country’s
economy and its leading companies will all suffer.
4. Buy European travel companies. With the euro gone, the peripheral nations
will see their currencies fall dramatically, while the core will see theirs
appreciate. One consequence will be that it will be dirt-cheap for northern
Europeans to go on holiday in Greece and Spain and Portugal again. A
traditional pattern of trade will emerge. Northern Europeans make luxury
automobiles and machine tools for the world, then two or three times a year
relax by sitting by the Mediterranean for a couple of weeks enjoying
themselves and spending all that money they earned. That will be great for
everyone involved in shifting people from place to place — the tour
operators, the airlines, the aircraft manufacturers, and the travel websites
. All of them will see their profits soar.
5. Sell the U.S. banks XX:GSPFI +0.51% but buy the dollar /quotes/zigman/
4867933/sampled EURUSD -1.83% . If everyone knows Greece will have to
default, what’s keeping them from pulling the plug? That’s easy. The
Germans and the French won’t want to ‘re-profile’ all that Greek debt
until they know their banks /quotes/zigman/116452/quotes/nls/eufn EUFN -4.09
% have largely sold both the debt and the credit-default swaps associated
with it to someone else. They aren’t stupid — they aren’t about to blow
up their own financial system. Who’s bought it? It looks as if the U.S.
banks have wound up owning a lot of Greek debt. The Asian /quotes/zigman/
116464/quotes/nls/fefn FEFN -0.04% and Middle Eastern banks /quotes/zigman/
1530451/quotes/nls/efn EFN -2.10% may have a lot as well. When the default
happens, they will be the ones who take the brunt of the losses.
The dollar will gain, however. The euro was a serious contender to take its
place as the global reserve currency. With that out of the picture, the
dollar will get another decade as the main currency of global trade. Its
weaknesses will catch up with it eventually — but the day of reckoning will
have been postponed.
There will be plenty of other consequences. Spain will be looking shaky.
Italy may recover from what has been, in effect, permanent recession since
it joined the euro. But those five trades should at least be enough to let
you join the Germans and the Dutch on one of those dirt-cheap vacations in
Rhodes or the Algarve.
Matthew Lynn is a financial journalist based in London. He is the author of
"Bust: Greece, the Euro and the Sovereign Debt Crisis," and he writes
adventure thrillers under the name Matt Lynn. | a****g
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