It is September 6th, 2011, around 1 am and it is easy to tell this week will be extremely volatile and risk aversion might be in full swing. The above table from Bloomberg shows the futures of the three major US indexes. DJIA is down 2.48%, S&P 500 is down 2.75%, and NASDAQ 100 is down 2.36%.
Why is this happened? Well one of the reasons can be simply found by looking at the EUR/USD.
The Euro broke, stemming from a critical German vote on the legality of bailing out Eurozone members such as Greece, Portugal, Spain, etc.
An excellent summary can be found in this recent article from the Telegraph:
- German stock markets plunge 5pc ahead of crucial vote on crisis
- "The German stock market plunged to its lowest level for two years - shedding 5pc of its total value in one day - amid fears of the apparent impotence of European leaders in the face of the debt crisis."
Middle east is also heating up, Turkey will be challenging the Gaza blockade in the UN while in the same week working with NATO to build a missile defense system for Europe.
Along with the Eygpt/Israel row and Syria's continuing uprising.
The fundamental and technical picture looks horrible for the markets and it is expected that without further stimulus the market will pull back substantially over 6 months. However, more easing will contribute significantly to a seemingly parabolic move gold and silver. Gold is close or at its all time high as I conclude this blog post:
Wow looks like it did or almost touched 1920... that is an all time high folks.
No comments:
Post a Comment