For over a year now, the world has been grappling with the possibility of a credit default by Greece -- today, analysts and the markets say that a default in some form is inevitable. The question analysts are now asking is whether it will be "orderly," with some arguing that such a thing could be a big relief to the markets.
What is an "orderly default"? The main concern, according to a report from MarketWatch, is protecting "banks and other investors holding the debt while keeping the crisis from spreading to other nations in the currency bloc." This means a restructuring of Athen's debt with specific terms, while keeping banks properly capitalized when they have to write down the Greek debt on their books.
"The markets have already figured out Greece is defaulting; that's what all the bond spreads tell you ... What they are really worried about is whether the system in Europe will get impaired," said Jason Pride of Glenmede Investment and Wealth Management.
"I think the world can absorb an orderly default of Greece at this point, and I think it would be a great relief to the market when it actually takes place. I think investors should be positioned opportunistically for that," chief market strategist at LPL Financial Jeff Kleintop told MarketWatch.
Analysts believe that if the markets positively responded to an orderly Greek default, markets could see a shift away from the flight to safety. Kleintop said, "We can get a 10% rally in the stock market on an orderly default in Greece ... Treasury prices and the dollar could fall as capital flows away from safer assets, lifting prices of commodities priced in the greenback."
For a look at U.S. stocks with high exposure to Europe, The Street created a list of the top 10 U.S. stocks that derive a big portion of their revenue from Europe.
Do you think these stocks would rally on an orderly Greek default? (Click here to access free, interactive tools to analyze these ideas.)
1. Edwards Life Sciences
2. Paccar
3. Dow Chemical
4. Pall
5. Lexmark International
6. Philip Morris International
7. McDonald's
8. Molson Coors
9. Owens-Illinois
10. Electronic Arts
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
Kapitall's Alexander Crawford does not own any of the shares mentioned above.