The Lloyd's of London insurance market said Wednesday that it has slashed its exposure to European government debt and pulled cash out of some of the region's banks amid the deepening eurozone crisis.
"Given the uncertainty around the eurozone, it's only natural that we would seek to reduce any potential downside risk," Lloyd's Finance DirectorLuke Savage told Dow Jones Newswires on Wednesday.
"As a result, we're not holding government debt of any peripheral EU country and have sought to reduce our exposure to banks in these countries."
#1 We are seeing an amazing number of bets against the S&P 500 right now. According to CNN, the number of bets against the S&P 500 rose to the highest level in a year last month. But that was nothing compared to what we are seeing for October. The number of bets against the S&P 500 for the month of October is absolutely astounding. Somebody is going to make a monstrous amount of money if there is a stock market crash next month.
#2 Investors are pulling a huge amount of money out of stocks right now. Do they know something that we don't? The following is from a report in the Financial Post....Investors have pulled more money from U.S. equity funds since the end of April than in the five months after the collapse of Lehman Brothers Holdings Inc., adding to the $2.1 trillion rout in American stocks.#3 Siemens has pulled more than half a billion euros out of two major French banks and has moved that money to the European Central Bank. Do they know something or are they just getting nervous?
About $75 billion was withdrawn from funds that focus on shares during the past four months, according to data compiled by Bloomberg from the Investment Company Institute, a Washington-based trade group, and EPFR Global, a research firm in Cambridge, Massachusetts. Outflows totaled $72.8 billion from October 2008 through February 2009, following Lehman's bankruptcy, the data show.
#4 On Monday, Standard & Poor's cut Italy's credit rating from A+ to A.
#5 The European Central Bank is purchasing even more Italian and Spanish bonds in an attempt to cool down the burgeoning financial crisis in Europe.
#6 The Federal Reserve, the European Central Bank, the Bank of England, the Bank of Japan and the Swiss National Bank have announced that they are going to make available an "unlimited" amount of money to European commercial banks in October, November and December.
#7 So far this year, the largest bank in Italy has lost over half of its value and the second largest bank in Italy is down 44 percent.
#8 Angela Merkel's coalition is getting embarrassed in local elections in Germany. A recent poll found that an astounding 82 percent of all Germans believe that her government is doing a bad job of handling the crisis in Greece. Right now, public opinion in Germany is very negative toward the bailouts, and that is really bad news for Greece.
#9 Greece is experiencing a full-blown economic collapse at this point. Just consider the following statistics from a recent editorial in the Guardian....Consider first the scale of the crisis. After contracting in 2009 and 2010, GDP fell by a further 7.3% in the second quarter of 2011. Unemployment is approaching 900,000 and is projected to exceed 1.2 million, in a population of 11 million. These are figures reminiscent of the Great Depression of the 1930s.#10 In 2009, Greece had a debt to GDP ratio of about 115%. Today, Greece has a debt to GDP ratio of about 160%. All of the austerity that has been imposed upon them has done nothing to solve their long-term problems.
#11 The yield on 1 year Greek bonds is now over 129 percent. A year ago the yield on those bonds was under 10 percent.
#12 Greek Deputy Finance Minister Filippos Sachinidis says that Greece only has enough cash to continue operating until next month.
#13 Italy now has a debt to GDP ratio of about 120% and their economy is far, far larger than the economy of Greece.
#14 The yield on 2 year Portuguese bonds is now over 17 percent. A year ago the yield on those bonds was about 4 percent.
#15 China seems to be concerned about the stability of European banks. The following is from a recent Reuters report....A big market-making state bank in China's onshore foreign exchange market has stopped foreign exchange forwards and swaps trading with several European banks due to the unfolding debt crisis in Europe, two sources told Reuters on Tuesday.#16 European central banks are now buying more gold than they are selling. This is the first time that has happened in more than 20 years.
#17 The chief economist at the IMF says that the global economy has entered a "dangerous new phase".
#18 Israel has dumped 46 percent of its U.S. Treasuries and Russia has dumped 95 percent of its U.S. Treasuries. Do they know something that we don't?
#19 World financial markets are expecting that the Federal Reserve will announce a new bond-buying plan this week that will be designed to push long-term interest rates lower.
#20 If some wealthy investors believe that the Obama tax plan has a chance of getting through Congress, they may start dumping stocks before the end of this year in order to avoid getting taxed at a much higher rate in 2012.
#21 According to a study that was recently released by Merrill Lynch, the U.S. economy has an 80% chance of going into another recession.
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