Following Up

Spain had a very weak auction of 12 and 18 month bills, forced to pay higher interest rates then what was paid at a similar auction just a month ago, so contagion fears ARE back on the table, I talked about this last night. Where Spain goes, Italy goes, thus the domino effect or contagion.

In Greece a two year bond was issued, get this, the yeild... 20% There's talk of restructuring Greek debt from Germany today with a deadline for the end of summer, however there are many who fear Greece will be down the tubes by then and paying 20% interest for a 2 year note is just amazing.

Here's what FXE, the Euro trust looks like this morning...

If that's not falling of the face of a cliff, I don't know what it is, a swan dive maybe? A swan song?

Here was the last update on the Euro/USD

Here's the USD via UUP this a.m.

Remember in general a rising dollar is bad for equities/commodities including oil and precious metals

With respect to precious metals, there is the chance of a flight to safety, however this a.m. GLD is barely up and SLV is down.

But all is not well at home, you've probably already heard that the S&P ratings agency downgraded the United States this morning in what many feel is a shocking move, but is it really? I don't think so. I'm not going to get into all of this right now except to say we have problems here in the US of course and the next auction should be interesting. China is at least doing something, but they have massive inflation problems and a housing bubble, the MENA region- ugh... however bad it is now, just look at Iraq and Afganistan's attempt to form a capable, legitimate government with all of the US and coalition troops backing them, then imagine the rest of MENA minus peacekeepers. This wil be a mess that escalates for years, maybe decades if recent history is our guide. Japan.... Well they still haven't contained the nuclear leaks, so I can't see Japan having a very good year, and that filters through the entire economy, take AAPL for instance, they get advanced technology from Japan for I-pads/Iphones and other products, they can't get what they need. That' just one small example.