Surprisingly, the market has not priced in the likely hood of a Grexit with the Euro holding up above 1.13 against the US Dollar and European bond yields have not been bid strongly either. Perhaps there is a strong belief among market participants that we may see positive news flow after the talks start with an emergency summit on Monday evening. Both Tsipras and Merkel will be in attendance so the decision makers are in place but whether either side concedes remains an open question. If an agreement is not made at the time, the next key event risk is the special summit planned for June 25-26. These two meetings are the last official opportunities for a deal to be reached but if it becomes necessary, the market remains confident that emergency meetings will be held on a daily basis into the weekend and the June 30th deadline.

This columns base case scenario is that the Greeks get some kind of a deal in which Merkel and her German colleagues can walk away with some sense of respect! After all, it would be a shame for the Euro economy to be hit by the economic shock of a Grexit after the European Central Bank quantitative easing measures have bought back a sustained uptick in economic activity. We have seen positive and encouraging readings on the CPI front, better than expected data releases in PMI activity, retail sales and manufacturing output.

However, if there is a last minute fallout in the discussions, the key point to note is that a Grexit is a long term positive for the Eurozone. There will be market ripples felt across the board and in various asset classes in the short term but the investment opportunities lie in buying the dips if there is indeed a deep sell off.