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Last weekend many people fell like having seen the turnaround in Greek tragedy. Some even say a “Grexit” has been prevented. See also our chart of the day for Greek government yields.

In fact we have seen a lot of noise around tough negotiations lasting until Monday morning. Erwin Lasshofer and his INNOVATIS team think we were supposed to do so.

Nothing has really changed. The Trioka of ECB, IMF and EU still want to avoid a possible Grexit as well as the Greeks do because both groups are afraid of negative effects in the short run. The Greeks want to keep foreign financial support this way. The creditors do not want to write off their billions – at least not yet. All are afraid of the political and economic chaos and subsequent costs such a move might cause. So why all that noise such as the Greek referendum and the creditors showing Tsipras the exit door?

You should keep in mind we still have some democratic institutions in place that need to be convinced of a possible future(!) deal. Political leaders just cannot afford to lose their face when coming home. First the Greek parliament has to accept all structural and financial reforms including pension system, taxation, privatization and more until Wednesday! That’s almost everything Tsipras promised to prevent in his election campaign. And he did not reach any debt relief yet. When German chancellor Merkel was asked after 17 hours of negotiations where one can find the Greek position in the current agreement she said it was the huge amount of debt they talked about!

Later at least seven other European nations will seek parliamentary approval for a bailout deal with Greece. There is still a considerable risk that not all approvals can be reached. In the meantime Euro-area finance ministers prepare a bridge financing of about 7 billion euros to keep Greece and its banks afloat in July plus another 5 billions for August. Only after all these steps and only after Greece enacts the latest reforms, euro-area finance ministers will work out the details in granting a three-year bailout loan from the European Stability Mechanism to Greece.

Can all this solve the problem in Greece? Erwin Lasshofer and his INNOVATIS team still see the need for a debt cut and expect Greece to demand continuing financial support from Europe for the foreseeable future. We do see more backwind for reforms in Greece now. Some sort of debt cut will be reached in the mid term. On the long run this might not be enough for a competitive Greek economy. Prepare for some more turbulences and noise to come until the bailout deal has been actually closed! Thus we would prefer all-weahter products now – such as Core Express or Capital Protection.