Article / 10 July 2015 at 5:12 GMT

The Matrix: A strategist’s roving thoughts – Risk-on Greece is fixed?

Global Macro Strategist / Saxo Bank Group - Singapore Hub
  • China is rebounding strongly, up 6.6% in Asian afternoon trading 
  • There was massive risk-on overnight with key moves and closes in EZ equities
  • Greece’s parliament is set to vote on the bailout proposal 7am CET

 By Kay Van-Petersen

 Back on the boil. Chinese equities have rebounded in Friday's trading. Photo: iStock

These are my main thoughts:
  • I remain bamboozled, gobsmacked and perplexed …. because clearly someone out there has a line to a perfect outcome from Greece/Europe over the next few days.
  • Massive risk-on overnight with key moves and closes in Eurozone equities:
– EuroStoxx +2.8%, CAC +2.6%, MIB +3.5%, PSI.20 + 4.0% and closing above 200D MA
– DAX +2.3%; we never broke the 200D MA
– Spain +2.7%; we are still under 200DMA
  • Interesting to note, that while the S&P closed up 25 basis points, it was the second consecutive close below 200D MA
  • And of course China is back on a tear; +6.6% as I write this and we continue to get new measures everyday
    – Closing up on another massive day, lowers the probability of the epic/historical measures I was talking about on Wednesday’s close (-33% from the top, in freefall). But I’d still think that it's greater than +50%
– As I’ve said before, we are higher by the end of the year – I would short the Fed and the European Central Banks before the People's Bank of China and we all know that you don’t fight central banks (99% of the time). Less than 10% of China’s population own equities (it's 90 million people, compared to +50% in the US,  and +80% in Australia). They have +USD 4 trillion in reserves, they have a mandate of deregulation and opening up the capital markets, they don’t have bickering senators and countries reps to the extent of the US or Eurozone.
  • If we continue to have massive risk-on in EZ equities, I’d be tempted to pick up puts with either a view of:
A. I walk in Monday and clearly all my huffing and puffing was for naught, I am an alien stranded on planet earth. So I close my puts and recoup some premium (bigger the rally today, the more priced in for further up move next week right?)
B. I walk in Monday and Greece walks out of the EZ and the markets jump off a cliff
C. I take out 3-4 month puts with the view of yes, we get a solution in Greece but the Fed hike in September is still game-on and we should see some shakeouts from that – especially in the US (IBB, biotech ETF… has had two -10% pullbacks this year with no big US correction)
– Also I will not pay up as much on vol
D. I want US puts cause vol is not as well bid there as in EZ. But maybe it's even cheaper through something like USDJPY
  • Greece’s parliament is set to vote on the proposal 7am CET, with the Eurogroup meeting over the weekend to see if something can be hammered out

Some TGIF charts
S&P 500, closes at +23bp at 2051 – 2nd consecutive close below 200D MA. Last time we did this was in October 2014. Russel and Nasdaq did not even come close to breaking 200D MA.
 Source: Bloomberg

Yet VIX still elevated … ticking up +1.6% to close just shy of 20.0
 Source: Bloomberg

 Source: Bloomberg

FTSEMIB. Closes +3.51% at 22,269 – back over the 200D MA for the 2nd consecutive day
 Source: Bloomberg

SHCOMP, currently +6.6% at 3996 – nice bounce off the 200D MA
 Source: Bloomberg

EZ Govies – Classic risk-off moves, as cores go out and periphs tighten…
Source: Bloomberg. Create your own charts with SaxoTrader; click here to learn more.

– Edited by Gayle Bryant

Kay Van-Petersen (KVP) is Asia Macro Strategist at Saxo Bank, the home of social trading. In addition to, please follow him on twitter @KVP_Macro
JohnJohn123 JohnJohn123
This comment has been redacted


The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail