(Reuters) - Greek Prime Minister George Papandreou won a parliamentary confidence vote on Saturday, avoiding snap elections which would have torpedoed Greece’s bailout deal and inflamed the euro zone’s economic crisis.
ENRIQUE ALVAREZ, LATIN AMERICA STRATEGIST AT IDEAGLOBAL, NEW YORK
“It looks like they are going to put together a unity government. Whoever takes the front in the unity government is still going to pursue the bailout package. I don’t think that is going to change very much.
“Before the referendum you had very split opinions as to what course to pursue, but I think that has changed now and most of the Greek political parties are very aware and fearful of unplugging the plug on the euro membership.
“So I think that, looking forward, that unity government is going to go on course and going to try to apply the recipes that were prescribed for the second bailout.
“Now the ball is off to Italy. The problem is not going to be Greece, the problem will be Italy because Italian rates at the 10-year level have been above 6 percent. That’s where the market focus has migrated to already and that’s where the real risk is now.”
MICHAEL YOSHIKAMI, PRESIDENT AND CHIEF INVESTMENT STRATEGIST AT YCMNET ADVISORS IN WALNUT CREEK, CALIFORNIA
“I’m surprised the margin was as big as it was. It certainly is a positive for the bailout and now we’ll see if there was a negotiated resignation and a new leadership some time soon, though that is not as quite a big a point anymore. No matter who’s in power Greece is going to have to accept the settlement offer. But (Papandreou’s) gamble backfired and he probably wants to turn the page. France and Germany get credit for drawing a line in the sand and saying they are not going to renegotiate the deal. Markets are going to react positively to that.”
MICHAEL WOOLFOLK, SENIOR CURRENCY STRATEGIST, BNY MELLON, NEW YORK
“We could see a small relief rally from this but I would not expect it to be too large. There’s still questions about whether people will live with these austerity measures. More broadly, the issue of whether or not the euro zone will be a political or economic union is still being put off. If the latter, membership is a privilege, not a right.”
PETER BEUTEL, president, Cameron Hanover, energy trading consultants, New Canaan, Connecticut
“With the confidence vote given to the Papandreou government, we end the week on new possibilities rather than a can of worms when the oil market comes back on Monday. We start next week on a position of strength, whether Greece has a unity government or a new person in charge. Markets will build on this sliver of strength although they are still a long way from getting out of the woods. But the confidence vote ends the week on a positive note.”
PETER KENNY, MANAGING DIRECTOR AT KNIGHT CAPITAL IN JERSEY CITY, NEW JERSEY:
“I think it will definitely add inertia to the attempts to get Greece back on track in terms of implementing the kind of austerity that will be essential for this thing to work. It will help (markets) on Monday but like everything else involving the euro zone it is a series of incremental steps.”
JURGEN ODENIUS, PRINCIPAL OF INTERNATIONAL ECONOMIC AND INVESTMENT STRATEGY AT PRUDENTIAL FIXED INCOME, NEWARK
“Even though he has won the vote, he engaged in a game of brinkmanship. He proposed a referendum and then had to retract it and is barely managing to produce majorities in parliament. All that means to me is that his days in power are numbered. There is a lack of legitimacy at this point even though he won the vote. At least, though, the worst has been avoided, where no new government was formed and Greece gets pushed into default. So at least we’re back to where we were before. So at the margin, it’s positive. But I don’t think the market will rally too much on this. Don’t expect a huge relief rally.”
THOMAS ROTH, EXECUTIVE DIRECTOR IN U.S. GOVERNMENT BOND TRADING, MITSUBISHI UFJ SECURITIES USA, NEW YORK
“It takes the risk off the table. It takes away the risk of a referendum (on the euro zone bailout) or renegotiating new terms. Net-net it’s a ‘risk-on’ event. How much you can rally on this? It may be temporary at best. You have still have a lot of risks like Italy. We just don’t know. We have (Treasuries) supply next week so that’s a factor. We could see Treasuries trade off a little. All in all, it’s a slight positive for stocks and a slight negative for bonds.”