Flu et al & Greece

BarroMetrics View: Flu et al

A killer flu is sweeping Hong Kong – there are fears will see around 200 dead and the epidemic last until April. Yours truly was struck down on the weekend and has only felt somewhat back to normal today. I have had the flu before but not like this: fever, runny nose, a chronic cough, congestion and phlegm. Luckily the only symptom remaining is a body filled with sore bones. Seeing the price some of the others have paid, I am one of the fortunate ones – especially if you consider my age.

My flu couldn’t have come  at a most importune time. Crude. S&P, AUDUSD and EURUSD all at critical junctions. I’ll say more about that next week.

Today let’s turn to Greece. At the Macquarie  Securities event on Feb 4, I said that one of the possible Black Swan events to affect the markets would be a Greek exit from the Euro zone. It is a ‘black swan’ not because it cannot be foreseen but because few believe it will happen; and most believe that even if it happens, there will be no contagion.

It’s now looking that the odds of a Greek exit have risen from improbable to possible. The next question is, what will be the effect?

My view is in the short term, a few hours or days of volatility, and then back to ‘normal’.  But, in the long term??? Given the feelings in Spain and Portugal,a Greek exit is likely to lead to an attempt to exit the Euro Zone there. And, if those exits happen, there will be contagion.

For me, Greece is like FACTA – quietly working away in the background, and by the time the  damage is seen, it will be too late.

Let’s see what happens.