You can see how tightly wound markets are around this Italian debt crisis. The euro rallied and S&P futures moved almost 18 points — solely on vague rumors that the ECB may be buying Italian debt. I very much doubt that. More importantly, EU leaders will be holding a special summit on the debt crisis to be held on Friday July 15th — that is more important.
Regardless; the rumor caused a squeeze in European financials. Some Italian banks like Unicredit are positive this morning.
So what we have here is a sea of rumors that causes shorts to cover, then put on positions again. Nothing is fixed. Nothing has changed. Real money still looks like it wants to sell this story.
You can see how untenable the debt game in Europe is becoming by just looking at the Italian auction of one-year Treasury bills that occured today. Italy sold 6.75 billion euros of Treasury bills at an average yield of 3.67 percent; but on June 10 they sold similar securities with a yield of 2.147 percent. And demand was lower this time around.
The Italian stock market is has rallied and is up about 1 percent.
1) Is tech a problem this quarter? Chip maker Microchip Technology lowered its sales forecast for Q2 to down 1.5 percent sequentially, from previous guidance of up 1 to 6 percent sequentially. Guidance was also lowered.
"We are seeing broad-based weakness in our business due to a number of factors," CEO Steve Sanghi said, citing lower automotive production, soft consumer business due to poorer global conditions, and reduced purchases in the computer portion of the business "by multiple large customers."
MCHP sells chips in many different business, and this is the kind of kitchen-sink commentary that seems unlikely to be company-specific; MCHP is down 10 percent pre-open.