May 20, 2010
Risky Assets Remain Under Pressure on Euro Weakness
Risky assets are under pressure this morning, driven lower by the weak Euro. Investors continue to pare positions in equities and commodities due to the lack of clarity
in the Euro Zone. Traders are unsure who is calling the shots. At this time, both politics and economics are playing major roles in policy decisions.
Earlier in the week, Germany took action to curb naked short selling. This move has made investors nervous about holding risky assets because it amounts to changing the
rules in the middle of the game. Investors aren’t sure what will happen next and are liquidating positions in order to prevent getting trapped in the market should another major regulatory change
take place.
The action by Germany is creating uncertainty in the marketplace. Institutions and major market participants don’t like what is taking place and are standing aside rather
then fall victim to the whim of the policymakers. This is helping to trigger the excessive volatility the markets have …
