First it was the study of finance, then the markets demanded reading up on political science and now an education on military exercises and strategy are necessary and unfortunately we can’t get it from the video game Call of Duty: Modern Warfare. Back in ’03, Iraq was market moving for only a short period of time and hopefully North Korea will be too if the Chinese can step up to calm down their insane friend. Government event risk is now polluting everyday of trading. As if European banking concerns weren’t enough, Asia got hit hard with the South Korean Kospi down 2.8% in particular and the Won is down to the lowest level since Aug ’09 vs the $. Spanish banking worries has sent the 5 yr Financial iTraxx CDS to a 2 1/2 week high, up by 18 bps to 183 as 3 mo US$ LIBOR rose another .25 bps to .536%. Spain’s 5 yr CDS is up by 40 bps to 255 bps and bond yields are higher across their curve. Since the bailout they are up 140 bps and Greece by 260 bps.
