CRASH RISK IS VERY REAL…NOT
Regarding my 23 May 2012
blog,CRASH RISK IS VERY REAL that included an excerpt of a commentary by
Michael A. Gayed, CFA, Chief investment strategist at Pension Partners, LLC. (excerpt
from MarketWatch): He suggested today
that credit Markets have improved and he is now not concerned about a
flash-crash in the very near term.
EUROPE STOCKS
SLUMP AFTER SPAIN DOWNGRADE (MARKETWATCH)
“Bankia plunges as ECB rejects recapitalization plan”
Pressure remained on the country as Egan Jones Ratings Co., on Tuesday after the market closed, downgraded Spain's debt to B from BB- with a negative outlook...”
“Troubled lender Bankia SA dropped the most in Spain, off 9.7%, as media reports said the government's plan to recapitalize the ailing bank with government debt was rejected by the European Central Bank.”
http://www.marketwatch.com/story/europe-stocks-slump-after-spain-downgrade-2012-05-30
“Bankia plunges as ECB rejects recapitalization plan”
Pressure remained on the country as Egan Jones Ratings Co., on Tuesday after the market closed, downgraded Spain's debt to B from BB- with a negative outlook...”
“Troubled lender Bankia SA dropped the most in Spain, off 9.7%, as media reports said the government's plan to recapitalize the ailing bank with government debt was rejected by the European Central Bank.”
http://www.marketwatch.com/story/europe-stocks-slump-after-spain-downgrade-2012-05-30
EURO BREAKUP ‘NOT A BIG
DEAL – U.S. IS SCARIEST(Bloomberg)
“Nassim Taleb, author of "The Black Swan," said he favors investing in Europe over the U.S. even with the possible breakup of the single European currency in part because of the euro area's superior deficit situation.
A breakup of the euro "is not a big deal," Taleb said yesterday at an event in Montreal hosted by the Alternative Investment Management Association. "When they break it up, there will be a lot of fun currencies. This is why I am not afraid of Europe, or investing in Europe. I'm afraid of the United States."
The budget deficit as a proportion of gross domestic product in the U.S. amounted to 8.2 percent at the end of 2011, government figures show. That's twice the 4.1 percent ratio for euro-region countries, according to data compiled by Bloomberg.”
http://www.bloomberg.com/news/2012-05-30/taleb-says-euro-breakup-not-a-big-deal-as-u-s-scariest.html
Mr. Taleb might be the only one with that opinion. Since many European countries owe the European banks big money, collapse of the Euro may mean banking collapse and major recession for Europe. It is unlikely the U.S. could avoid the fallout.
“Nassim Taleb, author of "The Black Swan," said he favors investing in Europe over the U.S. even with the possible breakup of the single European currency in part because of the euro area's superior deficit situation.
A breakup of the euro "is not a big deal," Taleb said yesterday at an event in Montreal hosted by the Alternative Investment Management Association. "When they break it up, there will be a lot of fun currencies. This is why I am not afraid of Europe, or investing in Europe. I'm afraid of the United States."
The budget deficit as a proportion of gross domestic product in the U.S. amounted to 8.2 percent at the end of 2011, government figures show. That's twice the 4.1 percent ratio for euro-region countries, according to data compiled by Bloomberg.”
http://www.bloomberg.com/news/2012-05-30/taleb-says-euro-breakup-not-a-big-deal-as-u-s-scariest.html
Mr. Taleb might be the only one with that opinion. Since many European countries owe the European banks big money, collapse of the Euro may mean banking collapse and major recession for Europe. It is unlikely the U.S. could avoid the fallout.
6 REASONS
SPAIN WILL LEAVE THE EURO FIRST
Commentary By Matthew Lynn: “Spain is too big to rescue, and doesn't want it anyway...
“The Spanish are a lot more likely to pull out of the euro than the Greeks, or indeed any of the peripheral countries. They are too big to rescue, they have no political hang-ups about rupturing their relations with the European Union, they are already fed up with austerity, and there is a bigger Spanish-speaking world for them to grow into. There are few good reasons for the country to stay in the euro - and little sign it has the will to endure the sacrifices the currency will demand of them.” Story at…
http://www.marketwatch.com/story/6-reasons-spain-will-leave-the-euro-first-2012-05-30
MARKET
Commentary By Matthew Lynn: “Spain is too big to rescue, and doesn't want it anyway...
“The Spanish are a lot more likely to pull out of the euro than the Greeks, or indeed any of the peripheral countries. They are too big to rescue, they have no political hang-ups about rupturing their relations with the European Union, they are already fed up with austerity, and there is a bigger Spanish-speaking world for them to grow into. There are few good reasons for the country to stay in the euro - and little sign it has the will to endure the sacrifices the currency will demand of them.” Story at…
http://www.marketwatch.com/story/6-reasons-spain-will-leave-the-euro-first-2012-05-30
MARKET
The S&P 500 fell 1.4% Wednesday
to 1313. VIX rose 15% to 24.14. I wrote yesterday that the market seems to be
waiting. It didn’t wait for anything today
– it was down all day, though the volume was not impressive, about 90% of average
over the last month.
The news looks pretty bad
from Europe. That will continue to drive
the market for a while.
NTSM
The NTSM analysis remained
HOLD today, Wednesday.
MY INVESTED POSITION
I reduced my stock
holdings to 30% (0% in stock in the 401k) at S&P 1358 after the SELL signal
on 9 May 2012. (See the page “How to Use the NTSM System” – the link is on the
right side of this page). I cut my stock
position to 15% on 17 May in order to maintain a 10% gain in a
trading/longer-term position I had in the QQQ.
