Friday said it all

As you may be aware, the market just took a little swan dive lower on news that the S&P ratings agency (most likely in a bid to regain credibility as Egan-Jones is eating their lunch) just came out with the following via the FT, but before we go there, lets go back to Friday's last post on where the market stands, "It's Not A Good Sign When...."

That post went on to show how quickly the 15/30 min charts deteriorated in a single day, making me question whether the S&P action was leaked last week. I concluded the short post with the following,

"This is when intraday charts can bounce around as much as they like, but it's pretty hard to overcome a 15/30 min leading divergence that forms in a single day."


Earlier today there were numerous warnings from the Credit/Risk Basket post  to the Financials post to the action in commodities and the Euro which have dominated many of today's updates. I have several charts I was going to post that show 3C  deteriorating ever more as the day went on, but you have seen them for the most part, just suffice it to say, that I would lean toward this S&P action was probably leaked sometime last week judging by how the 15/30 min. charts went down hill Friday.


Now, the FT article excerpts...

S&P ratings warning to top euro nations

Standard and Poor’s has warned Germany and the five other triple A members of the eurozone that they risk having their top-notch ratings downgraded as a result of deepening economic and political turmoil in the single currency bloc.

The US ratings agency is poised to announce later on Monday that it is putting Germany, France, the Netherlands, Austria, Finland, and Luxembourg on “creditwatch negative”, meaning there is a one-in-two chance of a downgrade within 90 days.

It warned all six governments that their ratings could be lowered to AA+ if the creditwatch review failed to convince its experts. Markets have been braced for a potential downgrade of France but few expected Germany’s top rating to be called into question. This in my opinion is BIG news, Germany? Wow! They'll be scrambling at this week's summit, but not before trying to put the S&P rating's agency through an Inquisition.

S&P told the six governments it would conclude its review “as soon as possible” after the summit. It told governments: “[I]t is our opinion that the lack of progress the European policymakers have so far made in controlling the spread of the financial crisis may reflect structural weaknesses in the decision-making process within the eurozone and European Union.”

Governments worry a downgrade would make it harder for the eurozone bail-out fund, the European Financial Stability Facility, to raise financing in the markets for its rescue packages of Ireland, Portugal and Greece as it is underpinned by guarantees from the six nations rated triple A . Those countries also fret that it could raise their own financing costs.

The stuff just got real