Wednesday, November 9, 2011

A Deadly Combination of An Overbought Pattern + Debt Bomb From Italy?

Too-Big-To-Save: Italy Totters on Debt Crisis Cliff
With its 10-year bond yields nearing 7%, Italy's debt is becoming a burden it will no longer be able to handle as it follows the same path as Portugal, Ireland and Greece.

And Now: France
French Bund spreads have just crossed 147 bps as the "cash bond long yet unable to hedge with CDS" crowd realizes that the Italian contagion is about to hit Paris.

Art Cashin: "The Spinout May Begin", And Why Equities Just Got Punk'd By Bonds Once Again

Goldman Expects Another 10% Margin Hike For Italian Bonds

Soros: Angela Merkel was the creator of the European crisis
Consequently, a disorderly default of European sovereignties may lead to a global financial meltdown worse than 2008. He explains his analysis here.

Marc Faber: They Can Postpone the Endgame For Five or Ten Years
Economist, global trend analyst and well know Doctor of Doom, Marc Faber, suggests that with so many monetary, fiscal and political variables at play, the end game of this crisis can be delayed for months or years to come.

Barclays Says Italy Is Finished: "Mathematically Beyond Point Of No Return"
Euphoria may have returned briefly courtesy of yet another promise for a resignation that will likely not be effectuated for weeks or months, if at all, and already someone has done the math on what the events in the past several days reveal for Italy.

Four Reasons to be Bullish on the US Dollar
   1. The EU debt crisis – when ECB becomes lender-of-last-resort we will see 10 figure move lower.
   2. Relative growth differences – The US is more dynamic and with only “one master” . – i.e. Congress vs. Europeans 27 members and lacking fiscal union.
   3. Competitiveness. US will able to compete on labor costs with close to 20 pc real unemployment and incoming tax incentives.
   4. HIA – Homeland investment Act – as stated above the Super Committee is trying to get a reduced tax of 5.25% in place.

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