Greece, Spain, Illinois? What?

For the third day in a row, U.S. stocks began the trading day looking mighty sickly, and are in line to end the day looking… well, less sickly. As of this writing, the Dow is a bit below 12,900.
The “recovery” in each day’s activity appears to start with the close of the European stock markets at 11:30 a.m. EDT. Indeed, “Trading was much weaker when European bourses were open,” writes Fusion IQ chief Barry Ritholtz.
“There remains an underlying liquidity bid containing the downside so far,” he adds – and he hastens to point out he’s not saying that from the vantage point of a permabull; his own firm is down to 40-50% exposure to stocks. “I’d like to see lower prices,” he says, “to put some equity exposure back on.”
As with the previous two days this week, Europe is getting the blame for the “risk-off” trade.

• Spain is on the verge of nationalizing one of its big banks; yields on Spanish 10-year debt have crested 6%.
• The European Union and International Monetary Fund are making noises about not releasing the next round of bailout money for Greece as long as Greek politicians continue to make noises about rejecting the bailout terms
• Italy’s prime minister has issued a plea for European leaders “to go beyond the rigid focus on budget discipline demanded by Berlin,” as a Reuters dispatch put it

With today’s developments, Spain has crept back into the top 10 among the most likely default candidates, as judged by the credit default swap market…


Yes, Illinois is a higher risk than Spain; this is the first time we’ve seen a U.S. state back in the top 10 for months. The Prairie State still has $9 billion in unpaid bills, despite jacking up the state income tax last year by 66%.
http://5minforecast.agorafinancial.com/ditching-the-dollar/