Mkts jittery ahead of US polls, Greece: Brewin Dolphin

Guy Foster, head-portfolio strategy, Brewin Dolphin explains to CNBC-TV18 that the European markets are jittery on US Presidential polls, the worsening debt crisis in Greece and the transition of power in China later in the week.

Below is an edited transcript of the analysis on CNBC-TV18. Q: What do you make of how the European markets are reacting to Greece and the volatility in the US?
A: I think it is not surprising that markets are a little bit jittery at the moment. Obviously volumes are extremely low ahead of the US elections and Greece is certainly dominating investors’ minds at the moment.
The jitteriness is evident in the CDS market and in the euro which is at a month's low at 1.27 against the dollar. It is just another source of uncertainty ahead of the election and the transition of power in China later in the week.
As far as we can tell, the ruling coalition in Greece has not lost enough votes in order to make the passage of legislation in doubt, but of course you cannot tell until the legislatures starts passing votes. Q: How pivotal is this Greek austerity plan and the vote on it?
A: I think the ways in which you can make a case for being more serious this time would be that Greece is so much closer to a primary surplus, which would mean that it would atleast, on paper, be less reliant upon foreign creditors and it would be a better situation to default and still be able to pay its own suppliers and public sector wages. That’s a highly theoretical situation, I do not think anyone believes that that is the case.
So, Greece, I think, is very aware of the fact that it is reliant upon these funds and that a disorderly exit from eurozone is going to be an extremely painful experience at the end of the five-year recession. On that basis, as I mentioned before, we would expect Greece to be going to be able to find the votes that in the next few months or at the beginning of next year will place that ruling coalition under a great deal of political stress. Q: What do you make of Spain, which is yet make a bailout request and the markets do not seem to be focusing on that that too much this time around?
A: We are seeing weaker CDR spreads in Spain. I think the market is going to push Spain into making that request and I think when they do, that's going to do a lot to reassure market. We are seeing still quite a meaningful rally since the 'whatever it takes statement' by Draghi. And the irony of course, is that the ECB has done nothing since. So I think over the next fortnight we expect Spain will make that request. Q: What are you expecting from the ECB this week?
A: We don’t expect no change from the ECB.