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Is Greek euphoria over already?
There was a significant surge in stock markets on Monday as the Greeks announced concessions in order to secure a bailout deal with the troika. It should be remembered however, that Greece is in the position where it is needing to borrow from Peter to pay back Peter. Even if a deal is done this week, it is only a short-term fix and the same problem will re-emerge for future bailout repayments. The Greek economy is still a basket-case and their debt is still unmanageably high. In addition, there is a slow-motion run on Greek banks which could cause major difficulties very soon. So I am expecting the current dip in the FTSE to continue with the next stop being 6,200 in the coming few weeks. Ultimately, I think the uncertainty over the Greece issue will push the index below 6,000 in the next two or three months. Only Grexit or massive debt relief will actually solve this problem, but, when that happens, we should see a significant relief rally.