Watch out the lion in the grass

The risks rebounded significant in European and US hours,  continue to head north  now. I cannot join the market here given a near-term unknown unknown in the market.

The known unknown, those recognized uncertainties like fiscal cliff, doesn't kill. somehow the market would price it in along the way until it really comes out.

What kills is the unknown unknown, which is not commonly seen by the majority, under-estimated by the market. We call it "lion in the grass" as it is how lions disguise themselves and prey on some other poor little animals .

In the coming weekend, we will have the chance to see one of these events. On the 25th Nov, Catalonia, an autonomous community of Spain, will have the parliamentary election, which is widely taken as an independence referendum.

Bear in mind that if Catalonia, one of the few positive contributors to the fiscal book of the Kingdom of Spain, leaves their motherland, all the assumptions/forecasts made before about Spain's debt-to-GDP ratio, debt sustainability will need to re-do. What would be the market reaction?

Here it comes to the question: How likely will Catalonia choose to leave? I really don't know. But whenever I watch FC Barcelona Vs Real Madrid, it seems the desire for independence is for real...

Watch out this Spanish lion in the grass this weekend...