Late on Friday the Spanish Central Bank announced that it was going to pump more than €19 billion into the third largest lender in the County Bankia SA effectively nationalizing the Bank.
The capital infusion was the largest bail out in Spain’s history and was designed to calm down the markets that have been worried about the toxic real estate loans that have been plaguing the country for more than six years.
The news also prompted S&P to downgrade the credit rating of four other major Spanish banks, and revise its estimate of Spain’s economy. The rating agency now views Spain as entering the dreaded double dip recession.
Historically the Friday before the Memorial Day weekend in the US is a time for sellers to take charge and this Friday was no different. The DJIA average declined by more than .5% and has now shed more than 6% for the month of May.
The sellers seem to be looking for a safe haven and as usually it is the US dollar and the US bond market. The 10 year note declined to slightly more than 1.7% and it is now nearing 150 year lows. The dollar continued its climb against the Euro and has now gained over 4% for the month and is up more than 16% in the past twelve months.
What is this new round of European woes going to do to our markets?
Will troubled investors look to our markets as a haven, or will they sell their corporate holding here fearing contagion?
It will take discipline to survive these troubling times and that is what I specialize in doing, teach my students how to take a crisis and turn it into winning trades.
I have taught hundreds of students how to learn the discipline it takes to become a successful trader and I can teach you too. To reach me contact one of my financial consultants, and they will be able to help you to determine which one of my plans will work for you.
Keep those stops tight.
Todd “Bubba” Horwitz
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