Europe, China concerns, who cares says the avg investor

The euro is falling to the lowest level since Sept ’10 vs the US$ after France sold 7.96b euros of debt with maturities ranging from 10 to near 30 years. The amount sold was just shy of the 8b the French had hoped to sell. The auction otherwise seemed to go ok but French yields are higher for a 7th straight day and we’re seeing another jump in yields in Italy and Spain with the Italian 10 yr in particular back above 7%. Unicredit’s stock, after getting slammed by 14% yesterday after the terms of their rights issue were announced, is down another 12% and the Italian MIB index is lower by 3%. Hungary failed to sell the full amount of bills it wanted to and the Forint is at a new low vs the euro. German Retail Sales in Nov unexpectedly fell by .9% and French consumer confidence held at the lowest since Feb ’09. The one economic positive in Europe was the UK PMI services index which rose to a 5 month high. In Asia, the Shanghai index, while holding above its multi year intraday low of last week, did close at the lowest since Mar ’09. In the US, all of the investor concerns of Europe and China seem to have been set aside as the AAII measure of individual investor sentiment has gotten very bullish. Bulls rose to 48.9 from 40.6 to the most since Feb and Bears fell to 17.2 from 30.8, the 2nd lowest reading since Nov ’05 (Dec ’10 the other one). While very fickle, from a contrarian standpoint it says watch out in the short term.

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