Last week was a perilous one for investors that were long risky assets.  Outside of the U.S. dollar, U.S treasuries, and gold, asset prices got pummeled across the globe last week on signs that the Greece sovereign debt issue was morphing into the next full fledged crisis.  Specifically, the Dow, Nasdaq, and S&P 500 surrendered 5.7 percent, 7.9 percent, and 6.4 percent respectively on the week. The Euro declined precipitously to its lowest level in 14 months on what felt like a run on the currency, while one, three, six, and twelve month Libor rates spiked higher on concerns that European banks were unwilling to lend to each other.

 The best word I can find to describe what happened yesterday in the markets is frightening. From about 2:40 to 3:00 pm et, it literally felt like the world was ending, eerily reminiscent to what the markets experienced in the 3^rd and 4^th quarters of 2008 and the 1^st quarter of 2009.  Specifically, the Dow Jones Industrial Average was down roughly 1000 points or 9.0 percent during that time, the biggest intraday move on record,  and was on a path towards a complete market crash. Fortunately, equities rebounded in the last hour of trading with the Dow finishing down 347.8 points.

 Contagion fears rippled through Europe yesterday spawning a massive sell-off in global equity markets. After the Euro nations and IMF agreed to a bailout of Greece on Monday, which still has to be voted on, rumors spread quickly that Portugal, Spain, Italy, and Ireland would each require their own aid packages in coming months, calling into question the short and long-term viability of the Euro as a  currency.  I have been stating for some time that the Euro is doomed, and it appears that currency traders across the globe feel the same way. 

 Friday was a sloppy day for U.S. equities as the Dow, Nasdaq, and S&P 500 registered their first weekly losses in nine weeks. Specifically, the Dow, Nasdaq, and S&P 500 lost 1.7 percent, 2.7 percent, and 2.5 percent respectively, with the financial services industry leading the declines. Goldman Sachs continued to decline, falling roughly 10.0 percent on Friday alone, after federal prosecutors are raising the possibility of criminal charges against Wall Street firm. Already suffering a public relations nightmare, it appears the government might be in the midst of a witch hunt against Goldman Sachs. 

 On Monday’s morning note, I commented that “Bulls remain on parade, and the much anticipated pullback that many expect hasn't happened. At this point, it is starting to feel like a pullback might not happen for some time.” What a difference a day makes. Equity markets across the globe got pummeled yesterday after S&P downgraded Greek sovereign debt to junk, while also downgrading Portugal’s sovereign debt rating one notch. These downgrades strengthened fears that a sovereign debt crisis is officially spreading throughout the Euro zone.