This is the first significant stock selloff we have seen in a couple weeks. But unlike the big down days we saw in August and September, this decline was on relatively light volume.
In fact, most of the month has seen notably lighter volume than the previous two months. Volume was lightening up even as the market made big advances in the past two weeks. Scott Redler called it "the new normal" for stock trading: low volume on the way up — and on the way down.
Recapitalization of European banks: has the train left the station? There's been significant push-back from banks who do not want to dilute their shares and take additional money for recapitalization, and who do not want higher minimum capital requirements.
Who can blame them for pushing back? Without some kind of comprehensive plan that would include addressing Italy and Spain, why would the banks just take a 50 percent haircut on Greek debt? They have no way of knowing that they won't be asked to take additional haircuts 6 months from now — on Italy and Spain.
That's why a more comprehensive solution is needed, but that may be elusive in the short-term.
One thing's for sure: the banks are going to take a bigger haircut on Greece. That train is pulling out. European officials are trying to convince the banks that they have greater reason to fear a disorderly default than they do a recapitalization.
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