As they say, easy come, easy go. In just a matter of days, the fire that we have been telling ourselves was under control is suddenly burning bright again, only this time, the epicenter of the blaze is a flight from Spain specifically, and an exodus from Euros more broadly.
That's right, el muro de la preocupación, the wall of worry, is back and Madrid's problems are now your problem.
"We're reminded once again that what was done was largely to defer or kick the can down the road, rather than necessarily cure the economic woes in the peripheral countries of Europe," says Mark Luschini, chief investment strategist at Janney Montgomery Scott in the attached video clip. "I think it's only a return of what we should have been seeing over the last several months but have had a reprieve."
For all the supposed "progress'' that was made this year at the hand of the European Central Bank's intervention known as LTRO (long term refinancing operations), we have just reset the clocks back to December; the barometer being the yield on the Spanish 10-year bond that is closing in on 6% and a 6-month high, as well as a renewed appetite for Swiss Francs (CHF/EUR) as a haven from an uncertain Euro.
"Their (Spain's) yields right now are the canary in the coal mine for me to see what investors are thinking about relative to the prospects of them becoming the new Greece," says Luschini, who argues that the stiff headwinds facing Europe never really went away.
As much as he is alarmed by this retreat, Luschini says he does not think we will see a repeat of the near panic conditions of 2011 where we were "skirting with financial Armageddon," but who knows.
At issue is whether Spain's fiscal and economic shortcomings are indicative of a larger slowdown in Europe, rather than the ''mild recession" that is already ''baked in" to the markets.
If things are indeed deteriorating, he says the most significant threat to the U.S. economy is probably more macro, or indirect, via a downtick in global growth lead by China due to a reduction of its exports to Europe.
Anybody know how to say, déjà vous in Spanish?