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Two Ways: IMF Sees Trillions in Toxic Debt


Strengthen your portfolio in good times and bad.


Cost of Protecting Bonds Jumps

In the wake of a series of reports saying the International Monetary Fund (IMF) estimates toxic debt held by financial institutions could rise to $4 trillion, the cost of protecting bonds from default on European banks jumped.

According to Bloomberg, credit default swaps on the benchmark iTraxx Financial Index, which is linked to 25 European financial companies, rose for the first time in 4 days - up 5 basis points to 165 this morning in London. Bad assets in the US may rise to $3.1 trillion, up from the IMF's January estimate of $2.2 trillion. Furthermore, the IMF may raise its estimate of toxic debt from Europe and Asia by another $900 billion.

Global financial institutions have suffered $1.3 trillion in losses since the beginning of the credit crisis. For more on the economy, see Professor Jack Lavery's Housing Optimism Is a House of Cards.

From the Bull Pen: Was the pullback in gold a buying opportunity? Those bullish can use the Goldminers ETF (GDX). Notice how the stock found support at its 200 DMA ($32.50-ish); a sell stop can be set below that level.

From the Bear Cave: Those bearish can look to Toyota (TM) for a downside play. The stock may be due for a correction; a buy stop can be set above $75.

Quick Check Around the World

Asian trading closed with the Hang Seng -0.46%, Nikkei -0.28%, Shanghai 0.80% and Taiwan 0.37%.

Glancing towards Europe, we see the CAC -1.59%, DAX -1.15%, FTSE -1.81%, ATX -2.25%, Swiss Market -0.25% and Stockholm -1.35%.

As of 8:30 AM EST, S&P Futures are trading -12 to 817.00, and Nasdaq futures are -15 to 1296.00.

A Look at Commodities

Over in commodities, crude oil is trading -0.95 to 50.10 while gold is +5.20 to 878.80 this morning. Silver is +0.250 to 12.135 and copper +1.85 to 197.75.

The dollar index is +0.60 to 85.6800.

On the Radar


03:00 Consumer Credit


Before: CHTT

After: AA, MOS, BBBY, RT

Click here for the full trading radar.

Good luck today, Minyans! Have a great day!

In memory of our fallen friend and trusted colleague, Bennet Sedacca, 100% of the donations made to the RP Foundation through April will be channeled to philanthropic endeavors consistent with the RP mission, working closely with the Sedacca clan in the distribution of those funds. We thank you kindly for your support as we strive to effect positive change in the lives of children.

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Position in GDX

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