Spain and Greece a Drag on Global Market Sentiment

ETFs continue to drop after Spain and Greece riots begin once more

The bears are definitely back from Europe as seen by the clear and continued drop in ETF and equity market prices this week.  Yesterday, the SPDR S&P 500 ETF (NYSEARCA:SPY) lost .56%, the SPDR Dow Jones Industrial Average ETF (NYSEARCA:DIA) lost .33%, the PowerShares QQQ Trust Series 1 ETF (NASDAQ:QQQ) lost .81%, and the iShares Russell 2000 Index ETF (NYSEARCA:IWM) lost .63%.

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Whether we like it or not, the bears are back in US equity markets, and the huge pop seen from the “easing” initiatives issued by Dr. Bernanke and Super Mario a few weeks ago are now burned up with the Molotov cocktails in Spain and Greece.  The new protests are strictly anti-austerity, strictly violent, and of course, strictly Déjà vu.

What hurts more however is the lack of confidence that citizens and investors feel over the ECB’s willingness and abilities to solve the sovereign debt crisis.  In a time when markets zoom to the sound of any easing rhetoric or action from the ECB or Fed, it is clear that for now at least the citizens and investors are no longer drinking the “easing” potion.  Whether more rounds of easing will work or not is yet to be seen, however investors are not happy about what they are seeing or hearing now.

Furthermore, Philadelphia Federal Reserve President Charles Plosser’s statement yesterday regarding QE3 made matters worse, as Mr. Plosser stated that QE3 would not do “anything but undermine the Fed’s credibility.”  Sadly, the lack of confidence in more easing is spreading fast and quick.

In other news, new home sales dropped .3% in August, according to the Commerce Department, and the VIX has risen to the “fear” occasion by rising nearly 20% in the last two days.

Bottom Line:  All eyes are on Europe and the bears have re-emerged.  More troubling is the notion that the “easing” rhetoric by Dr. Bernanke and Super Mario have spurred markets into the red, not green, and the citizens of Spain and Greece have begun throwing Molotov cocktails once more.

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John Nyaradi is the author of The ETF Investing Premium Newsletter.