Today was clearly a “risk off” day. After the EU had all the “good news” by extending another $100 billion to Spain which enabled them to kick the can down the road for another few months.
I will use spot WTIC crude as an example, but really, this could have been a chart for any of the major indicies and bond yields:
I always play this imaginary game with myself: looking at just one intraday chart and then extrapolating how the rest of the market fared in the day. Financial wizards call this “correlation”. Basically you can see how the entire commodity market (minus Gold and Silver) did by just looking at the Canadian to US dollar ratio. If the Canadian dollar strengthens, its a pretty good sign that commodity markets are up.
Today, with crude down, clearly the Canadian dollar will be losing purchasing power. The fun, however, is looking at individual issues and picking out the semi-liquid ones that have gotten taken down with margin calls. I still don’t see signs of too much distress in the non-AAA/AA/A Canadian corporate debt markets at the moment, unless if you’re an investor in Yellow Media.
I’m waiting to pounce for the day that I can deploy this cash, but it is still not here.