The surge got its mojo from a rather perfunctory statement from Europe's leaders ahead of their informal dinner meeting. More wishful than weighty, the sentiment boils down to a desire for everything to go right from here on in: Greece quickly forms a new government, decides to stick with the austerity program, stays a part of the single-currency bloc.
No word on eurobonds. No detail on what contingency plans may or may not be being made for a Greek exit. No real substance.
Yet it was enough to bring stocks back for an hour, a day at least. That means there just isn't enough fear out of there yet. Analysts at JPMorgan Chase addressed the subject in a strategy note earlier Wednesday.Pavan Wadhwa, global rates strategist with the firm, puts a 50% chance on Greece exiting the European Monetary Union within the next two months and he sees "severe negative consequences" should this come to pass, including a continued deposit and capital flight from the country; a drop in access to capital markets for other sovereigns, most notably Spain and Italy; and good old debt contagion as he estimates "the Euro-area's exposure to peripheral countries is about ¿2.5T