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Greece might be finally turning things around, says Morgan Stanley analyst Daniele Antonucci....

Greece might be finally turning things around, says Morgan Stanley analyst Daniele Antonucci. While the country isn't actually recovering, the huge uncertainty that was caused by fears of a Grexit and other factors, and which was destroying economic activity, has been removed. The recession is alleviating, Greece is becoming more competitive and it's almost achieved a primary surplus.
Comments (20)
  • kmi
    , contributor
    Comments (3967) | Send Message
     
    Wow. Well, as someone with exposure to Greece I can say that yes, Grexit is gone, but that doesn't mean Greece is 'fixed' by any measure. The regulatory environment has not changed, public sector reform has only been performed in the most perfunctory window-dressing manner, and the institutions and central government are still controlled by the same people who screwed up the country in the first place....

     

    What's changed is money in/money out, i.e. yes the primary surplus is almost a reality but its being funded not by economic activity but by savings, which are being depleted. What this means to me is the bottom isn't in yet....

     

    The dozen 'temporary' taxes instituted to siphon money from the people to pay off the government's public sector originating debt don't reflect an improving economic environment that will increase revenues and balance the country's budget. Economic activity is depressed and people have run for the hills (moved to their farms to live off the land while taking advantage of tax incentives promoting agriculture activity).

     

    The main reason the government is not pushing public sector reform is because of how large a part of the domestic economic activity it makes up. There's nothing to fill that vacuum if the government squashes it. Most Greek investment activity is now occurring outside the country in places like Bulgaria, because the Greeks themselves cant handle the regulatory and tax burdens of operating commerce in the country. And that hasn't changed either.

     

    Observers watching the numbers will miss a large part of the reality. (GREK) has had a nice run over the last 6 months or so, but I'm not buying. That run was based on the Grexit coming off the table. In my opinion the real bull run hasn't started yet. I could be wrong of course, watching things from a small business perspective, and the GREK reflects much larger entities, who have direct lines to the government and political leadership, so do your own homework.
    21 Jan 2013, 09:14 AM Reply Like
  • schatzl
    , contributor
    Comments (391) | Send Message
     
    @kmi, great post,

     

    that Morgan Stanley analyst is not worth the pin-striped suit he's wearing.

     

    The fundamentals are not only poor, but deteriorating at a scary pace.
    here the latest ELSTAT figures:

     

    - Industrial orders -15,5% for Nov.
    - Foreign Industrial orders -38,6% for Nov
    - approved constructions - 42,7% in Oct
    - construction down 91% from '05 highs.
    - unemployment up 0,6% to 26,8% Oct
    - industrial production down -2,9% in Nov to 1978 levels.

     

    I could go on, but alone your post and my numbers discredit those completely absurd claims by Morgan Stanley.

     

    It highlights the generally poor quality of dissected information that is fed to the public by the banks.

     

    Muppets beware!
    21 Jan 2013, 02:00 PM Reply Like
  • apppp
    , contributor
    Comments (382) | Send Message
     
    Grexit is not off the table. It will eventually happen, Draghi saying the Euro is irreversable ensures that this will get much worse but the euro eventually loses members.
    21 Jan 2013, 07:39 PM Reply Like
  • Michael McGaughy
    , contributor
    Comments (18) | Send Message
     
    This is the best comment and insight into Greece that I've seen. Thanks for posting.

     

    While I agree with it and it is in-line with what I saw in Greece from my one trip to Athens, I believe Greece remains one of the world's least expensive markets a CAPE basis. While there I met several listcos that are surviving and in some cases taking advantage of the acute economic downturn.

     

    I have a full position there - at least for me - and at these levels I still think it is worth looking taking a long-term buy-and-hide attitude.

     

    Thanks again for posting. Very insightful.
    21 Jan 2013, 09:21 PM Reply Like
  • Archman Investor
    , contributor
    Comments (2319) | Send Message
     
    "Greece might be finally turning things around, says Morgan Stanley analyst Daniele Antonucci"

     

    I would pay money to have this analyst parachute into a Greek stadium filled with the 60% of all Greeks that are and remained unemployed.

     

    It really amazes me that the lies these analysts put out get one second of attention.
    21 Jan 2013, 09:18 AM Reply Like
  • Teutonic Knight
    , contributor
    Comments (1988) | Send Message
     
    @Archman,

     

    Get no angry, Sir, this is standard practice of most so-called 'analyst'. The poor folks have to drum up something for satisfying their bosses in the editorial room, and, of course, to making a living (on lies).
    21 Jan 2013, 09:24 AM Reply Like
  • Archman Investor
    , contributor
    Comments (2319) | Send Message
     
    Hi Teutonic, hope you are well and having a happy New Year.

     

    Agree 100%.
    21 Jan 2013, 09:28 AM Reply Like
  • june1234
    , contributor
    Comments (2333) | Send Message
     
    MS Stanley is up to it's ears in all that "insured" CDS sovereign debt out there maybe why their stock is worth around 20% of it pre 08 levels Same recovering Greek debt sold for 31 cents on the dollar when the Greek gov bought back 10 billion Euros worth of it a little while back. That's what it worth on the open market . Doubt its listed that way on MS books
    21 Jan 2013, 10:33 AM Reply Like
  • DQJS24
    , contributor
    Comments (36) | Send Message
     
    Greece has a lot of work to get done in the next three years as financial shortfalls will be expected and with the climbing unemployment and poverty rates, its clear that the way the bailouts are being processed into their economy has not been working.
    21 Jan 2013, 10:50 AM Reply Like
  • jondoo
    , contributor
    Comments (38) | Send Message
     
    Like kmi, I have a certain exposure to Greece, and I can tell you unequivically that Greece is no where near the point of being able to turn things around. In fact, the situation 'on the ground' is as bad as I have ever seen it (over the past 16 years) - record high unemployment, taxes, homelessness, and violent crime. Severe shortages of prescription drugs and hospital supplies to the point where people are dying because the health care system is bankrupt. Salary and pension cuts to the point where people have to choose between eating, paying their electricity bills, and paying their rent or mortgage. The courts have been on rollover strikes since the crisis began and the jails are overflowing because court hearings are continuously postponed.

     

    On paper, Greece may have turned some theoretical corner, but ask the people of Greece how things are faring and you will get a completely different story. Bottom line - this was and remains a political crisis. The scandal surrounding the Lagarde List is the tip of the iceberg. The elected officials of this country have stolen billions from the treasury and stashed it offshore and/or used their ill begotten gains to fund elaborate lifestyles for themselves and their relatives. Like many politicians their goal is to stay in power to continue the good times while the ordinary citizen suffers. Despite the mainstream media headlines, the MPs continue to receive in income and benefits the equivalent of USD 20.000 per month yet the overwhelming majority of that is tax free. Their benefactors, the majority of whom are shipowners, continue to pay almost no income tax and the taxes they do pay on their vessels is by gross tonnage at a ridiculously low rate.

     

    It is interesting to observe that these 'elitists' are now being targeted by what the media calls 'anarchists'. In reality, these are unemployed and homeless people who have nothing left to lose but to seek justice against those they believe are responsible for the country's and their own ill fortunes. Sadly, the violence will continue to accelerate until or unless the economy starts to grow or the government is overthrown. It is anybody's guess which will happen first.
    21 Jan 2013, 11:52 AM Reply Like
  • Interesting Times
    , contributor
    Comments (9618) | Send Message
     
    I learned loooong ago to NEVER invest after what a so called analyst thinks!!
    21 Jan 2013, 06:30 PM Reply Like
  • EMS
    , contributor
    Comments (550) | Send Message
     
    Utter nonsense. Really.
    21 Jan 2013, 06:49 PM Reply Like
  • Ohrama
    , contributor
    Comments (504) | Send Message
     
    Yes, we (Americans) also solved all our problems (with 1.xx T dollars of deficit per year during the last 4 years and well into the future that we can see) and on our way to prosperity. I was driving through U of Cincinnati and the prosperity is every where. I saw perhaps new buildings covering 3 blocks with parking garages and lovely student apartments. All our tax dollars working for Obama! My daughter was saying that with all these new shiny buildings, OSU now require the students to live in the dorm for the first two years. Of course, they don't have to worry. They will get equally shiny jobs or their loans will be forgiven providing more incentives for the economy to grow.
    21 Jan 2013, 07:25 PM Reply Like
  • Teutonic Knight
    , contributor
    Comments (1988) | Send Message
     
    We didn't have much of a choice, didn't we?

     

    One is a spend thrift community organizer, and the other is a corporate raider who wouldn't even want to tell you how much income taxes he paid in the past except the last 2 years; let alone not caring about that 47%!

     

    LOL!

     

    Really loud! ROFL!
    21 Jan 2013, 07:51 PM Reply Like
  • Interesting Times
    , contributor
    Comments (9618) | Send Message
     
    Waiting for my daughters loans to be forgiven...Honestly i would take that deal as long as no credit ratings are affected...Sorry, but i want a piece of the freebies as well!!
    21 Jan 2013, 07:49 PM Reply Like
  • Teutonic Knight
    , contributor
    Comments (1988) | Send Message
     
    Isn't that good?

     

    The United States produces more PhD's than the rest of the world combined. [Same thing with Defense Spending too].

     

    I smell a rat!
    21 Jan 2013, 07:59 PM Reply Like
  • bdarken
    , contributor
    Comments (401) | Send Message
     
    Greece is one thing.
    Cameron and the UK is a whole new dialogue....
    21 Jan 2013, 10:36 PM Reply Like
  • xiomata
    , contributor
    Comment (1) | Send Message
     
    As a trader whose just come back from Greece, what I sense is that point at which things are god-awfull, yet you know the beast isn't going belly up. Its going to survive. This is the point at which one would have bought Bank of America at 5 dollars or Ford at $1. So even though unemployment is scary, as is poverty and politics, my bet at this point is that 5 years from now Greece will still be in the EU and will have successfully weathered this transition without civil war, imploding or bankruptcy. There's no way to prove that, which is way this is the point at which you make real money on a bet. But it looks and feels that way to me (I'm a turnaround trader), so I'm buying Greece at this point with a look to double my money within the next two years.
    22 Jan 2013, 02:49 AM Reply Like
  • schatzl
    , contributor
    Comments (391) | Send Message
     
    I appreciate your thought and I'd love to jump in too, but the only thing I see stabilising is the ECB backstopping national debt and general Eurozone politician's support for Greece. "Only" may be the wrong wording here, as that guarantees short term solvency (prob. medium term too).

     

    I've traditionally been an investor that orientates his investments on fundamental macro-economic data. That data can be considered the environment in which companies generate their future earning streams. Current liquidity programmes across the world have not really improved fundamentals. Growth via national debt or solving solvency through liquidity can only ever be a short term "solution". You're still facing the same issues with the added burden of additional debt.

     

    So far the fundamentals have not even stabilised and if Greece would have been the odd one out, it might have recovered via trade with the other Eurozone countries. The problem is a deteriorating picture for all Med. economies, so I expect a direct negative feedback loop between these countries. From Spain, Italy, Greece, Portugal to France.

     

    The other issue is a "stabilising Euro" which means reduced trade competitiveness again due to a stronger currency. To be witnessed in Spain, where the recovering Euro has reversed the recovering trade deficit in the last quarter.

     

    The next issue is real reform. I simply have not seen it. And quite contrary, because the ECB is backstopping failing economies, the pressure is off.

     

    Another issue are austerity programmes that are acting pro cyclical. They're implemented at the worst possible time.

     

    On the whole, Greece is just the tip of the iceberg and not the odd one out. It simply exemplifies the other Meds. in an extreme fashion.

     

    I personally believe this to be a short lived liquidity induced reprieve. Severe depression across Europe is what I expect to fully develop in the next years.
    22 Jan 2013, 06:06 AM Reply Like
  • kmi
    , contributor
    Comments (3967) | Send Message
     
    I am inclined to agree with both xiomata and schatzl here.

     

    There is some measure of opportunity here: small business entrepreneurs making moves now are going to benefit from some pretty low cost structures moving forward, low rent, good locations from vacated failed businesses, that sort of thing. And some efforts in this regard are evident.

     

    At the same time, like scahtzl points out, the real structural problems have not been resolved. For example, real household wealth is still in decline, and will likely continue to be. More importantly, you won't see any serious FDI until the investment environment improves, and the political leadership hasn't been aggressive in that respect.

     

    An investment in Greece, by which I assume most folks here are talking about (GREK), isn't necessarily a bad idea considering just how far the Athens Stock Exchange has fallen. But for my 2 cents I'd look for a pullback to get really long, or buy small to open and increase on the pullback. Watch the regulatory environment for clues.

     

    The (GREK) reflects the largest market cap entities in Greece, which will be less negatively impacted on average by the situation encountered by the average Greek, who is still retrenching. On the other hand, the stability provided by the recent 'liquidity induced reprieve' and taking the Grexit off the table, provides meaningful benefits to the GREK 20.

     

    Unless the Eurozone implements real central tax authority and subsidizes weaker 'economies' via central 'government' - or starts kicking members out (unlikely) - Greece and the other Club-Meds will have a pretty prolonged crisis. I do eventually expect a central tax authority to evolve however over the next few years, before things evolve into what schatzl expects to be a "severe depression."
    22 Jan 2013, 07:56 AM Reply Like
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