On Wednesday investors were wondering if the market would continue to blow off negative news from Europe – after the latest development called Germany’s pristine credit rating into question.
Largely believed to be a pillar of strength - Egan Jones downgraded Germanyto AA- from AA, a move that suggests the financial woes of Europe may ensnare Berlin, too.
Although Egan Jones is a smaller ratings agency, “Sean Egan has been trying to get in front,” explains senior strategist and CNBC contributor Gary Kaminksy.
The pros think these developments will force investors to confront the possibility of a similar downgrade coming from the larger ratings agencies such as Fitch, Moody’s or S&P – something that until Wednesday seemed unlikely.
Is a stock market storm brewing?
Trader Josh Brown thinks investors will get a ‘tell’ from the way the S&P trades into the close. “Will the market look at this downgrade and focus on it? I don’t know?”
Brown is inclined to believe the market may be much more influenced by data out of China. That’s been the trend lately, China trumping Europe.
“I’m really caught up in the new math,” Brown says. “I’m really trying to decide what the market is going to focus on.”
Trader Brian Kelly doesn’t expect the market to react negatively.
Despite the downgrade he remains a buyer of German bonds. “There are only so many places in the world that you can go to for safety, and German bunds is one of them.”
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Trader disclosure: On Jan 18, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders Kelly is long GLD; Kelly is long KRE; Kelly is long IWM; Kelly is long XHB; Kelly is long USG; Kelly is long MHK; Kelly is long TLT; Kelly is long US BONDS; Kelly is long GERMAN BUNDS; Kelly is short Euro Stoxx; Weiss is long BRCM; Weiss is long QCOM; Weiss is long DVN; Weiss is long EUO; Weiss is long CSC; Weiss is long MOS; Weiss is long GM; Weiss is long F; Weiss is long ETP; Weiss is long NS; Weiss is long HPQ; Weiss is long RIMM; Weiss is long WLT; Weiss is short AAPL puts; Weiss is long FXA; Najarian is long AAPL; Najarian is long GS; Najarian is long LLTC; Najarian is long KBH; Najarian is long CQB; Najarian is long EMC; Najarian is long CREE; Najarian is long FCX; Brown is long JPM; Brown is long WFC; Brown is long AAPL; Brown is long HD; Dicker is long oil; Dicker is long MCD; Dicker is long AA; Dicker is long CHK; Dicker is long VALE
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