Germany Shoots the Messenger

Overnight markets were higher as the world appeared to take a deep breath after the recent bashing of global equities. The Spooz loved that and the market opened almost 1% higher, before giving up the entire rally in the first hour. From there the market kept grinding lower all day and closed with a loss of about 1.5% (though the Dow fared a bit better).

Today's big story (which created the major undertow for stocks and euros) was the move by Germany to ban the short-selling of the stocks of bankers and insurers, as well as CDSs on government bonds. Speculation as to the reasons why they did that centered on a potential breakdown in the recent bailout accord due to Germany's inability to pass the required legislation.

Inquiring minds want to know, what's next? Capital controls? The problem is not the market -- the problem is the flawed constructs and bad ideas that are now being exposed.

Away from stocks: The dollar was strong and the euro fell out of bed again, losing 1.5% and tanking to a new low. Oil dropped 1%. Bonds were higher, even when stocks were, too (just the opposite of what we saw yesterday), and they surged when stocks sank. As for the metals, silver was a bit higher and gold lost 0.5%.