D&D Note (6-12-2012) ~ Volatility Swings The Markets Back Into The Green

D&D Note (6-12-2012)

Today’s market action was a relief rally after yesterdays extreme sell-off. Expect to see further volatility like we’ve seen the last few trading days until a real solution to the Euro Crisis is implemented. Until Greece votes this Sunday markets will remain in extreme uncertainty trading off every new headline that comes out.

Highlighting the panic surrounding the European Sovereign debt crisis was the spike in Italian and Spanish 10-Year bonds. The Spanish note hit a euro-era high of 6.8% today, while the Italian note remained above 6% creating worries that Italy will be the next needing a bailout.

All three American indexes gained over 1% on the day. The DOW (INDU) gained 163 points, the S&P 500 (SPX) gained 15 points, and the Nasdaq (COMP) gained 33 points.

Asian stocks ended lower following suite to the American markets yesterday, but European stocks ended higher setting the tone for today’s American rally.

Oil gained 62 cents to close at $83.32 a barrel.

Gold gained $17 to close at $1,613.80 an ounce.

The American 10-Year Note fell today pushing the yield up to 1.67%.

Today in D&D’s discussion this week on our “Comprehensive Long-Term American Deficit Solution,” we are highlighting the “Annual Budget Deficit Reduction Plan Component.”

“The Annual Budget Deficit Reduction Plan would be linked to the National Sales Tax, which would reduce the long-term deficit. The Annual Budget Deficit Reduction Plan would reduce the annual budget deficits by 10% each year until after 10 years the budget would be in balance… The Annual Budget Deficit Reduction of 10% would work as follows: A) Congress would pass a year 1 budget with a projected deficit reduction of 10%. B) At the end of the government’s fiscal year 1, the annual deficit would have to be the target of 1 trillion dollars less 100 billion or 900 billion dollars. C) If the actual year 1 annual budget deficit exceeded 900 billion dollars, the excess would be allocated in across the board percentage reductions of the year 2 budget amounts, which would have already been reduced by 100 billion from year 1 and 100 billion for year 2.” excerpt from the paper “Comprehensive Long-Term American Deficit Solution,”  by Del Lienemann, Jr.

Tomorrow we will briefly discuss the “Tax Reform Plan Component.”