Larry McDonald Calls Portugal CDS a Bear Signal

Action in Portugal’s credit-default swaps might be a telling bear signal, economic expert and author Larry McDonald said Wednesday.

While Greece has “backup” private-sector involvement that could buoy its economy, the Portugal CDS 5-Year was at record levels, McDonald said on “Fast Money.”

“It’s decoupling from the rest of the group,” he said.

The PTCD5 was $1,453.03 in evening trading.

McDonald likened the situation with Portugal and Greece to a financial event horizon in 2008.

“The political will to save Lehman Brothers — and I talk about this in my book — was really taken away from Bear Stearns,” he said.

McDonald called it a bearish signal in the intermediate term.

“It doesn’t necessarily mean the world’s going to blow up tomorrow,” he said.

However, the bull-bear ratio being at the highest levels since February didn’t mean a euro currency trade was the answer for the next couple of weeks.

“The euro was so oversold toward the end of the year. It’s in a nice run here,” McDonald said. “For the next week, the euro looks fine — for the next two weeks.”

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Trader disclosure: On Jan. 25, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders: Terranova is long VRTS; Terranova is long IBM; Terranova is long SU; Terranova is long SJM; Terranova is long BRCM; Terranova is long MUB; Terranova is long EMC; Terranova is long F; Terranova is long SBUX; Terranova is long V; Terranova is long AXP; Terranova is long APC; Terranova is long OXY; Terranova is long TRLG; Terranova is long JNPR; Terranova is long CSCO; Terranova is long WFM; Terranova is long XOM; Terranova is long UNG April $5 puts; Finerman is long (JPM); Finerman is long (BAC); Finerman is long (PLCM); Finerman is long (IBM); Nathan is long AAPL Jan puts; Nathan is long BAC Jan puts; Nathan is long MS Jan puts; Nathan is long NFLX Jan calls; Nathan is long INTC Jan put spreads; Nathan is long MSFT puts; P. Najarian is long AAPL; P. Najarian is long BAC calls; P. Najarian is long C; P. Najarian is long JPM calls; P. Najarian is long MSFT; P. Najarian is long INTC; P. Najarian is long JCP

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