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Two Ways: IMF Sees Trillions in Toxic Debt

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Strengthen your portfolio in good times and bad.

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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

Economics

03:00 Consumer Credit

Earnings

Before: CHTT

After: AA, MOS, BBBY, RT

Click here for the full trading radar.

Good luck today, Minyans! Have a great day!



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Position in GDX

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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