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Action Insight Weekly Report 5-19-12

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Risk Markets to Stablize Briefly after Steep Selloff, But Vulnerable to Greece, Spain and Italy News

Risk aversion dominated markets last week and wold stock markets turned negative for the year as MSCI world index erased all it's gains this year. We're talking about S&P 500 having the losing losing streak since last August. Major European indices fell last week with notable fall in FTSE by -5.5%, CAC by -3.9% and DAX by -4.7%. Greece ASE tumbled as much as -10%. The chance of Greece exit jumped as political leaders failed to form a coalition government and is heading for new election in mid-June. But the worry didn't stop there. The deeper concern is indeed in the Eurozone financial sector as a whole as well as all peripherals. Benchmark 10 year Spanish yield jumped to as high as 6.5% during the week, highest since last November, before closing at 6.25% while 10 year Italian yield close rose to 5.78%.

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