from Zero Hedge:
We warned last week
that European markets were beginning to show signs of cracking.
European stocks had surged on to new highs while credit markets had
decidedly not joined the liquidity-fueled exuberance. Sure enough a few
days later and Europe in general is weak, but Italy and Spain are under
significant pressure. The last four days have seen the biggest plunge in over six months with the IBEX (Spain -5.7%) and Italy’s MIB -6.7%.
At the same time, Europe’s seemingly invincible OMT-promise-protected
sovereign bond market has started to underwhelm. Italian bond spreads
are 32bps wider and Spain 28bps wider – the biggest increase in risk in
two months. Europe’s VIX has surged from 14.5% to almost 19% today in
the last 4 days and even Greek government bonds are losing their luster,
-6.5% in the last few days. Whether this is exacerbated by European
leaders jawboning the strength of the EUR down, or simply we hit the
limit on reality amid Italian bank fraud, Spanish political fraud,
referenda votes, and macro- and micro- fundamentals snapping; this is
the worst performance in Europe in six months. It would seem that if
the tail-risks in Europe are starting to re-appear then at least one
of the legs of global equity exuberance is starting to break.
Read More @ Zero Hedge.com
We warned last week
that European markets were beginning to show signs of cracking.
European stocks had surged on to new highs while credit markets had
decidedly not joined the liquidity-fueled exuberance. Sure enough a few
days later and Europe in general is weak, but Italy and Spain are under
significant pressure. The last four days have seen the biggest plunge in over six months with the IBEX (Spain -5.7%) and Italy’s MIB -6.7%.
At the same time, Europe’s seemingly invincible OMT-promise-protected
sovereign bond market has started to underwhelm. Italian bond spreads
are 32bps wider and Spain 28bps wider – the biggest increase in risk in
two months. Europe’s VIX has surged from 14.5% to almost 19% today in
the last 4 days and even Greek government bonds are losing their luster,
-6.5% in the last few days. Whether this is exacerbated by European
leaders jawboning the strength of the EUR down, or simply we hit the
limit on reality amid Italian bank fraud, Spanish political fraud,
referenda votes, and macro- and micro- fundamentals snapping; this is
the worst performance in Europe in six months. It would seem that if
the tail-risks in Europe are starting to re-appear then at least one
of the legs of global equity exuberance is starting to break.Read More @ Zero Hedge.com
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