Carnage In The “Core”

core abdomen man

[credit provider=”Wikipedia” url=””]

European markets are done for the day, and the key theme is: Carnage in the core.Markets were down across the board, but it was the European interior that took it the hardest.

Both the DAX and the CAC-40 fell over 2%.

If you include Italy in “core” it’s even worse, as the FTSE MIB index, fell 3.3%

Obviously, the fear that problems on the periphery will seriously damage the strong economies of Europe is becoming more severe.

Also, bear in mind that up until recently core countries were sharply outperforming those on the periphery.

The below two charts from Goldman Sachs (made in April) showed how German stocks out performed Spanish stocks as the Spanish debt situation worsened. (The first chart shows Spanish 2-year yields, and the second shows the DAX vs. the IBEX… they basically look the same. As yields worsened, German outperformance improved).

Anyway, it’s obvious that the situation on the periphery (credit-wise) has gotten to the point where investors don’t think Germans can avoid the carnage.

German Spanish

[credit provider=”Goldman Sachs”]

German Spanish

[credit provider=”Goldman Sachs”]