The mess in Europe makes it difficult to be long equities. Italian and Spanish bond spreads are 30-40 bps wider to the Bund on the week. Large Euro banks down 5-1o percent.
The tape makes it difficult to be flat or short, however. All-time highs in the S&P500 a chip shot away. The squeeze higher into the end of the quarter continues as defensive sectors outperform.
The downside risks outweigh the upside, in our opinion, though the market doesn’t seem to think so. The sirens are calling. Time to tie ourselves to the mast.
(click here if chart is not observable)