The US markets sold off hard this morning as fears about the stability of Italy reemerged. European markets were down 2-3% as the 10 year Italian bond yields reached historic levels. The resignation of Italian prime minister Berlusconi was shrugged off yesterday but reconsidered today. As the 8th largest economy in the world, Italy's economic stability is much more important than Greece's. The debacle that accompanied all things Greece will pale in comparison if Italy follows the same path. It is a very fluid situation and one we are obviously watching very closely.
US markets are off their lows and it will be important to see how the market closes this afternoon. A vast majority of mutual funds and advisors have underperformed this year and will be anxious to buy any dips in the market. This buying pressure could keep the end of the year rally intact. 1220 on the S&P is a key number to watch as a breach of this on the downside would indicate further weakness and would call into question the rally that began in early October.
Welcome to the extended version of the BAM Market Note. We are not bloggers by nature but have had clients and friends inquire about our thoughts on the market in between our newsletters. The number and content of posts will likely be determined by the conditions of the markets and the interests of our readers. We would greatly appreciate your feedback and comments.
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