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Editor's Note: This is an excerpt and chart from today's morning strategy note written by Hedgeye Director of Research, Daryl Jones. If you're interested in staying a step ahead of consensus, click here to subscribe. 

CHART OF THE DAY: Is #Greece Just The Tip Of Europe's Iceberg? - COD z EL. yields

...[T]he bigger issue with Greece is that it has the potential to be the tip of the iceberg in Europe.  If history over the past decade tells us anything about Europe, it is that the area’s fiscal and competitive imbalances are contained, until they are not.

 

As an example, while Portugal’s deficit is fully funded for 2015, its longer term fiscal metrics remain disconcerting.  With a public debt-as-percentage-of-GDP at 130% and a deficit-as-a-%-of-GDP still running at 4 – 5%, is far from out of the woods.  Certainly, the country, as evidenced this year, can fund via debt when times are good, but in deeper recessionary scenario when the deficit naturally broadens, that debt loan will likely give creditors pause.