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Market Not Buying The Fat-Fingered Excuse

The User's Profile Chris Martenson May 7, 2010
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Well, it’s another day with another bout of exceptional volatility.

As I type this, the S&P 500 is down -23 points, the Dow is off by -240, no -183, no-210, no -91….oh never mind.  Let’s just watch while sitting on our trading thumbs.

Meanwhile, gold is stubbornly hanging around the $1200 mark and the news out of Europe is awful.

This is the news that makes me the most worried:

Bank Risk Soars to Record, Default Swaps Overtake Lehman Crisis

May 7 (Bloomberg) — The cost of insuring against losses on European bank bonds soared to a record, surpassing levels triggered by the collapse of Lehman Brothers Holdings Inc., as the sovereign debt crisis deepened.

The Markit iTraxx Financial Index of credit-default swaps on 25 banks and insurers soared as much as 40 basis points to 223, according to JPMorgan Chase & Co. The index closed at 212 basis points March 9, 2009. Swaps on Greece, Portugal, Spain and Italy rose to or near all-time high levels.

Credit risk rose for a sixth day on concern the Greek debt crisis is spiraling out of control and triggering concern banks may face losses on their sovereign bond holdings. The Group of Seven plans to hold a conference call today to discuss the turmoil, after a global stock rout that briefly erased more than $1 trillion in U.S. market value.

The fact that the credit-spread disease has now traveled over to hit the banks themselves says that the financial markets in Europe are simply not buying the so-called ‘solutions’ being attempted by the EU policy makers.  As well they shouldn’t.  The solutions will not work.

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Top Comment

I found this market commentary by Themis Trading over at ZeroHedge.  There’s some important commentary below, especially the part about the busted trades and the...
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