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Light wanted for the end of the tunnel

Markets had to plug punches in the gut from everywhere as a bunch of bad news hit the tapes bringing the whole mess we re actually in to the surface.
German Finance Minister Schaeuble hit the tapes saying he s against a “blank check” for the EFSF to purchase bonds. As the EFSF is too small to address problems beyond Greece, Ireland & Portugal anyway, I wonder were the issue is, but it seems as if it caught people by surprise.
US debt ceiling clock is ticking down as there s still no solution on the horizon making a downgrade even more possible. Further markets get shrugged by disappointing earnings and further weakening economic data. A trend which was confirmed by the Beige Book which pointed to a further growth slowdown provided evidence for a still weak housing market.
So the risk off trade continues with gold hitting new highs, German Bund yields falling, CDS Levels & bond spreads widening further and equities trading deep in red territory. Volatility was rising but we saw no sign of panic so far. My impression is that most of the selling so far came from multi asset desks looking to offload risk using the most liquid asset class.
Overall no new news (at least for our valued readers) and we highlighted these risks several times showing ways to take advantage of it.
As the trend of negative news flow continues we stick to our well known view with only little upside potential besides short lived rallies we like to use for fresh overwriting.