Posted on 02/25/2013 1:14:58 PM PST by blam
MARKETS FREAK OUT (-217), YEN SURGES AFTER SHOCK SPLIT VOTE IN ITALY: Here's What You Need To Know
Sam Ro
February 25, 2013
Huge swings in the Japanese yen, euro, and U.S. dollar came in the wake of some wild news out of Japan and Italy.
First the scoreboard:
Dow: 13,784, -216.9 pts, -1.5 percent
S&P 500: 1,487, -27.7 pts, -1.8 percent
NASDAQ: 3,116. -45.5 pts, -1.4 percent
And now the top stories:
* Over the weekend, reports surfaced that Japan would be sending a Haruhiko Kuroda to head the Bank of Japan. Kuroda, the head of the Asian Development Bank, has a reputation for being uber-dovish, which is exactly the characteristic Prime Minister Shinzo Abe has been looking for. When Asian markets opened, the Japanese yen tanked and the Nikkei surged.
* Without question, the big story of the day has been the Italian general election. The initial exit polls showed that Pier Luigi Bersani won big, which is what the market wanted. With Bersani came the expectation that Italy's ongoing reforms to manages its massive debt load would continue. European markets closed up at 11:30 AM ET.
* However, as more votes were counted, it became apparent that the race was actually much closer than expected with Silvio Berlusconi getting much more traction than anyone expected. At this point, it's looking like gridlock with no clear winner. As these headlines rolled out, the euro tanked.
* Meanwhile, the Japanese yen recovered all losses and surged against both the euro and the U.S. dollar. U.S. stocks closed at their lows of the day.
(Excerpt) Read more at businessinsider.com ...
Financial gimmickry can only forestall the day of reckoning for a short time. The devastating consequences of three generations deficit spending, unpayable huge debts, currency dilutions and a continued expectation that people can continue to consume more than they produce is not pretty. Western countries are about to experience shocking declines in living standards.
That is a HUGE swing, with the Euro on the losing side, especially as for the past six months the Euro has been gaining steady ground.
The US Dollar and British Pound are also getting hammered badly by the Yen but not as badly as the Euro.
Is it just the Italian election results or is there something bigger afoot?
It got my attention. Took some off the table.
As a swing trader it’s nice to see the VIX up again.
2013 had been boring.
A classic case of OCV (Obama-caused volatility). Meant to further scare you until he can successfully roll Boehner on the sequester.
Once Barry gets his way all will be sweetness and light on Wall Street again. You’ll see.
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