There are more than $20 billion of credit default swaps outstanding on Argentina’s bonds. I don’t think that number is big enough to spark any trouble but you never know, it’s a process so it’s no final yet.
One theory is that the same vulture funds who hold Argentina bonds have been big buyers of CDS.
Those storm clouds I mentioned yesterday might be cracking open now.
FTSE -0.7% today -1.65% on the week
Cac -1.0% today -2.95% week
Dax -2.1% today -4.50%
Ibex -1.8% today -3.44% week
FTSE Mib -1.0% week -3.33% week
PSI 20 -3.0% today -10.46% week
Italy 2.76% +7bp
Spain 2.56% +6bp
Portugal 3.70% +9bp
Germany 1.13% -2bp
Stocks are in a whole heap of trouble and we’ll need to watch how weak or strong bounces are. Any that are met with heavy selling and reversed will signal further downside to come. This is proper knife catching territory and it can suck you in. The trend is your friend and stocks might be making a new one.
I wish you all a very good weekend and will see you on the other side.
The 18 March lows mark a possible last line of defense before a more sustained move lower. We held up at the 61.8 fib of the Jan/Jun lo/hi at 97.56 yesterday but that’s gone now.
WTI crude daily chart 01 08 2014
97.00has been a historical S&R point and a break has the ability to see a quick run down to 95.00. Much further down the big level is 91.20-91.60 area and one to watch if we run that far. Brent has also broken out of the July range and is testing the October 2013 support line at 104.75. We bounced from a first test but it’s under pressure again. 103 marks an important point before a fall towards the 100 mark.
Brent Daily chart 01 08 2014
We’re being driven by demand worries rather than geopolitical fears but they are still bubbling under the surface. I’m going to look to play a small long here in Brent if we hold that support line. If we break then I may look at a short if the line holds on a retest.
He notes that the report fits with Yellen’s narrative of people coming into the market to restrain jobs growth and said the Fed is in no rush to hike:
When last surveyed in June, officials said they didn’t expect to move to raise interest rates until 2015, and officials have quietly encouraged the market’s view that they won’t move until the middle of the year.
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