Greek Contagion – CAC down 5% in mattter of minutes, VIX up nearly 100% in 2 days

Greece was given an aid package by EU-IMF to contain any contagion effects but looks like it has failed miserably.No one knows how this one will play out whether the Euro will be dissolved or the countries in question will default/haircut or something new which no one has thought of yet . The  huge amount of uncertainty is hammering the markets and making the VIX vault to incredibly high levels though nothing near the Sept 2008 levels. VIX is up almost 100% in 2 days , while Oil is down almost 15% in the last week. Gold is the only commodity which is going up whilst the others wilt in the face of the Greek debt onslaught. If this is not a contagion it is very close to one. G7 ministers are supposed to talk today but don’t know what they can do to solve a problem over phones. WE LIVE IN INTERESTING TIMES

Stocks Drop as European Debt Crisis Spurs Global Market Rout; Dollar Gains – Bloomberg

Global stocks tumbled, with U.S. benchmark indexes erasing gains for the year, while Treasuries rallied after Europe’s debt crisis spurred a market rout yesterday that undermined confidence in financial trading mechanisms. The dollar strengthened and oil slid 2.5 percent.

The Standard & Poor’s 500 Index fell as much as 3 percent to 1,094.15 as of 10:41 a.m. in New York, extending its tumble from this year’s high in April to more than 10 percent. The MSCI World Index sank 2.9 percent and the Stoxx Europe 600 Index plunged 4.5 percent to the lowest level since November. The 10- year Treasury note’s yield slipped six basis points to 3.33 percent. Greece led a drop in bonds of debt-laden nations, with the 10-year yield premium demanded to own the securities instead of benchmark German bunds rising to a record 944 basis points.

“There’s lack of confidence,” said Keith Wirtz, who oversees $18 billion as chief investment officer at Fifth Third Asset Management Inc. in Cincinnati. “Who wants to go long over the weekend? Europe is suffering the consequences of a deterioration in confidence. And over here, when I read about the computer glitch, I just felt intimidated.”