European stocks hit hard, but US and emerging markets holding up

Volatility continues, but VIX dropped to 21.08 yesterday. High yield bonds have not recovered the sell-off, but US stocks came back somewhat. DAX and CAC hard hit, both down more than 4%, though. So far this crisis is regional in its nature and EM and US stocks are not too affected, but we doubt that EU policy makers will be ready with aid in time to calm down the PIIGS debt markets.

We have a "buy-on-dips" stance on equities today as earnings are still quite strong. The Fed, Poland and RBNZ all kept rates unchanged yesterday.

Watch out today for a host of E-Z confidence figures at 11:00 CET. And keep a close eye on PIIGS debt yields.