HYBRID VIGOR VOL 2 ISSUE 26: The Reverse Trojan Horse?

We never get tired of the story, most famously told by Vergil in Book II of the Aeneid, of Odysseus’ successful trick, loading himself and his comrades into a giant wooden horse on Troy’s shores, the ersatz departing gift that lured the Trojans into a false sense of victory.

Has Prime Minister Tsipras done the opposite? There’s reason to believe the trick he’s played has been on his country and himself. His gift has certainly been real for long- suffering volatility buyers.

I’ve never been a big fan of the euro. It’s always seemed to me that it can do more harm than good. Then again, I’m just a landlocked American, so what do I know. And all that said, I don’t think Greece will ultimately leave the euro, let alone set a precedent for other departures. It will be a mess—it already is-- but probably a contained mess, despite what a lot of talking heads have been saying.

The action this morning has been predictable, perhaps even including the failed (for now) rally. It’s hard to see how any of this is good for new issuance, or anything else convertible related, in the short term. But our guess is that it’s more likely to be an ugly big blip and a volatility-capturing opportunity than the start of any major correction.

Of course, we’ve been wrong before.

(This is the cover letter for the subscription-based weekly Hillside's Hybrid Vigor newsletter. For a complete copy, please contact John Anderson at + 1 (646) 712-9289 x 107).