How to Protect Against the Imminent Risk of a Severe Pullback

By Katchum:Since the crisis of 2008, the unemployment rate for the PIIGS has been increasing rapidly. For the PIIGS (Portugal, Italy, Ireland, Greece, Spain), the unemployment rate more than doubled from 2008 up till now (Chart 1). (Click to enlarge)

Cliff Wachtel submits: Trend drivers of the prior and coming week, and how to play them: PRIOR WEEK MARCH 7-11 EU DEBT CRISIS FEARS RE-EMERGE This was by far the biggest market mover of the past week, as a steady stream of bad news about the PIIGS sovereign debt and banking crisis battered markets this week. Highlights included:

By Cliff Wachtel: As acceptance of at least a partial Greek default grows among EU leaders, all PIIGS bond rates have been spiking over the past week to reflect increased risk premium now that the assumed EU put is gone.

This has been an occasional theme for us, but after some conversations last week, think it warrants a deeper look. The various parties interacting in the market have become more correlated and the relationships more intricate. The growing use of ETFs by institutions is a key part of that self-reinforcing feedback loop.

Marc Chandler submits:Spanish bonds have fallen each day this week. The 13 bp increase today brings the 10-year yield increase to 30 bp this week, easily the worst performing bond market within the euro zone. Portugal has the dubious honor of being in second place with a 19 bp yield increase. Pressure is also evident in the short end of the coupon curve. The 2-year yield is up 19 bp on the day and 32 bp on the week; again easily the word performer over the past five sessions.

Cliff Wachtel submits: When you think there’s a strong trend up or down in risk assets, few trades can move as fast as crude oil. Note the chart below (click to enlarge).

Cliff Wachtel submits: If you could only read one short article to prepare for 2011, this is it. First we take a look at the consensus for 2011, and then our view. Array of Bulls vs. Bears