I appeared on Channel News Asia again this morning at 8:30am SGT, live from their Raffles Place studio. My questions and my responses in the form of brief notes are below:
Q1. Will any Greek debt deal be a stop gap measure and will Athens seek further bailout again this year?
Yes. There are still major problems in Greece. On a scale from 1 to 10, Greece is still a 1 and the temporary measures are to stop it falling to 0. There is a lot more work to do to sort Greece out.
Q2. Will a deal spur European markets and the euro zone’s economy?
Not necessarily. Most of Europe probably want Greece out. If something can be arranged and Greece remains within the EZ, this continues to place pressure on Europe. The longer term sentiment for the Euro is still most likely bearish.
Q3. US stock indices are near all-time highs, are there still plenty of room for further gains?
Yes. Both major US indices have been struggling with resistance at key levels for most of this year. The DJIA around 18,200 and the S&P500 around 2100 and now that both have moved slightly higher might see a shift in sentiment to a more bullish outlook. This consolidation for the last 6 months can be a good thing and allow a move higher to be more sustained.
Q4. The Shanghai Composite Index dropped roughly 13% last week in its biggest weekly drop in more than three years. Will the sell-off resumes today?
There is a good chance. China’s market is still up 122% from a year earlier and obviously that cannot be sustained. I think you can expect some more above average volatility whilst some normality creeps back in.
A picture of the studio before the live cross is below.