Wow, we’re getting pretty ridiculous media stories. The S&P is down most since December? Yeah, at 1.4%! Cry more?
Euro-indices are widely lower by at least 2%, and smaller places like the Scandies are seeing broad based falls of 3+%. Currencies are going haywire as well, with the EUR/USD at -0.8% and any peripherals in line with beta of 2, falling around 1.5%. Yen is going like a rocket, up over 1% in USD terms, although still duking it out with the dollar over the 80 line. Euro terms is thus pushing back to below 106, around 1.8% up. Aussie dollar is doing a pretty valiant stand around USD 1.06, but seems less intent by the minute to hold on to any gains.
Over in commodities, gold is down over 2%, silver and platinum giving up more but from better relative performance as of late, so allowing gold to catch up. Still, these compound falls are pretty strong.
Overall, risk off, and everything goes back to “old patterns” except for gold aversion, which is now back to the “inverse USD relationship” momentarily, as other currencies save the yen are falling. So, if you’re in US equities, consider yourself somewhat lucky.
But… why did this happen today? Well, guessing fear got the better of the market again, after taking a break for a long time. Greek PSI looks like a mess by any other name, and after all risk has been in the “more the better” range for a long time now. Am I expecting this to actually impact money management decisions and anyone actually trying to figure out the best areas of relative values rather than reading the chart and geting the momentum readout? Nah, not really. So, lets see if the money spigot is back on (more QE, the world is waiting, Ben!) or if we have to endure another gut-churning headline-driven global markets volatility cascade anytime soon.
Keep your ulcer meds close and your dry powder capital dry!