Making sense of today’s events – the Euro is going back up relative to the dollar, gold is relatively quiet, oil continues to drop…
The one big change that probably is being overlooked is Canada – their dollar dropped about 5% in one day relative to the US dollar. The majority of Canadian oil is comes from the oil sands and is sold to the U.S…. but it is expensive to produce. A large percentage of Canada’s GDP is now energy related – this might mean that oil has fallen below the breakeven point for production from the oil sands…. or it might be that the U.S. is going to be needing a lot less oil soon.
The biggest losers in the S&P 500 seem to be financial services and insurance companies (and energy) – which could either be problems in Europe or the Senate pushing forward with “Financial Reform”. Stocks related to day to day living (food, retailers) were down the least – only 3 of the S&P 500 stocks went up today.
Germany intervening to block short-selling (although the details of this are not clear to me) is also not going to be received well. “Free” markets stop working when governments try to dictate the outcomes.
