We expected a Greek solution, but not this one.
The Greek people may vote to stay in the Euro in their July 5 referendum, however it will not avoid default on June 30 (when a large payment to the IMF is due).
What happens now:
This should not have an enormous impact:
Central bankers will have contingencies in place to try and stave off any contagion for other parts of Europe and as we continue to discuss, central bankers do not like volatility because it creates uncertainty.
Does this impact the US Federal Reserves decision on interest rate increases?
Possibly, however it will remain to be seen what if any consequences develop and how the Fed will respond. Likely their approach will be cautious and dependent on further developments.
We have taken a cautious approach to investing for some time, based more on value than expected or unexpected geo-political and economic developments.
We have continued to have an over-weight in cash waiting for opportunities (better prices) to develop before committing capital for long-term investing (because we expect the unexpected).
That is our nature.
Scott Tomenson,CIM Managing Partner, Chief Investment Strategist