Backshall would expect to see notable deterioration in European financials should we see further deterioration in European sovereigns.
The current relationship between financials and those in different sectors is too narrow, he argues, relative to the sovereign risks.
As for U.S. financials, Backshall warns to expect connected contagious risk from this, but not nearly as much debacle as the European banks will experience.
Personally, I think it makes makes little sense that some fixed income managers are piling into junk credit like kids in a candy store while apparently selling sovereign at same time. If a global double dip happens, the downside on corporate junk is much more daunting than it is for sovereign debt.
But back to Backshall, with guests this informative, our monitoring of this situation is augmented. As sovereign debt goes, so does sentiment on the global economy. We will cover this closely on The Strategy Session.
Programming note: "The Strategy Session," hosted by David Faber and Gary Kaminsky, airs weekdays at Noon ET on CNBC.
Gary Kaminsky does not hold any equity positions.
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