Tuesday, August 2, 2011 7:54 AM – New Euro Debt Problems, Credit Downgrade?, Slowing World Manufacturing Growth

Stock futures before the open are down -0.4%. World markets are down -0.5% – -1.0%. There are 3 main worries this AM.

(1) Fresh major troubles in the European debt crisis.

According to London’s venerable Financial Times, “Benchmark 10-year bond yields reached 6.46 per cent for Spain and 6.26 per cent for Italy, heading closer to the 7 per cent level that propelled Greece, Ireland and Portugal to seek bail-outs. The premiums Madrid and Rome pay [are] . . . nearing levels that could trigger margin calls . . . unnerving bankers.”

Bailing out Greece or Ireland or Portugal’s small economies is one thing but Italy and Spain are the 3rd and 4th largest economies in Europe. Germany and France do not have the funds to bail them out.

(2) The debt ceiling deal cuts less than S&P said was needed to avoid a US credit downgrade

(3) Slowing manufacturing in the US & around the world (Chart from today’s WSJ)

Click chart to enlarge

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