Stock and bond markets as well as banks are closed today. Europe might have wished it was as European stocks fell -4% on the day; Germany -5%. European banks lost 6%.
Germany’s Supreme Court rules Wednesday on the constitutionality of European bailout provisions and while it is not expected to rule against them it very well could put restrictions on how bailouts are done. European banks continue to be undercaptialized and no one believes they have solved the European debt crisis.
Last Friday US investors got a terrible jobs report and stocks dropped -2.5%. Stocks will probably open sharply lower Tuesday, gold and treasury bonds should be up while corporate bonds will probably be down in sympathy with stocks. Look for a -2% to -3% drop right off the bat. We are only 4.5% higher than the previous low. If stocks drop -6% to -7% this week, it could be “look out below.”