This can’t be good (another RED ALERT):

The much awaited bounce from extremely oversold conditions has happened yesterday. I was going to say that it might be some sideways action for a couple of weeks and then a slide. May be that’s all the Ben Bounce we are going to get for a while. Brace yourself for another leg of sell off.

On Monday  I mentioned that France’s SocGen and UK’s Unicredit were rumored to be on the bring of disaster. Here is an update.

• Trading in Unicredit was halted this morning (ZeroHedge)
• Something is afoot at the French banks says FT Alphaville.
• ZeroHedge just reported this on SocGen
• Update: SOCGEN NOT IMMEDIATELY AVAILABLE FOR COMMENT: RTRS.

  Following earlier news that French CDS hit a record high on a rumor of an imminent French downgrade, the bloodbath in financials, first started in Italy, with 3 consecutive halts in Intesa causing endless headaches for Italin investors, the red tide has now shifted over to France, where SocGen, three years after fooling the Chairsatan that the world was ending and pushing him to cut rates by an unprecedented 0.75% on what was a trader error, now succeeded in getting the chairsatan to extend  ZIRP for two years… And still that is not helping. SocGen was down 17%21% as recently as minutes ago, on a repeat rumor that SocGen is indeed on the verge of insolvency, and that it participated in an extraordinary meeting convened by Sarkozy this morning. We are following the story and will let you know if we see any halt in the relentless selling of the bank which is rapidly becoming the next Lehman. Elsewgere, BNP was down over 8%10%, and Credit Agricole about -7.5%9.2%. “If credit default swaps on France are under attack that’s not a good sign,” said Yves Marcais, a sales trader at Global Equities in Paris. “That means that France is under attack and that’s worrisome. French banks hold a lot of French bonds.” Translated: another vicious and quite toxic catch 22, stemming from the blow out in French CDS. When will they ever learn?

I also mentioned on Monday that rumors are floating about France’s debt rating is about to be downgraded. Another update on this from ZeroHedge:

The catalyst: a fresh new rumor that France is about to be downgraded, which would send all of Europe into a risk flaring tailspin as it would obviate the EFSF even before it has been launched. The rumor is also rattling the EURUSD, which has dropped about 50 pips from the highs. As a reminder, this is not the first time the French downgrade rumor has emerged, however it is the first time since a rumor about a major AAA-rated country downgrade was proven to be true (ref: last Friday).

Meanwhile in German, Angela Merkel is facing backlash from German citizens for footing the majority of European bailout bill via EFSF. (Via Financial Times):

Battle lines are being rapidly drawn up in the German Bundestag for what promises to be a bruising debate over the crisis measures to stabilise debt markets in the eurozone.

Angela Merkel, the chancellor, and her finance minister Wolfgang Schäuble face a revolt among their own supporters in both the Christian Democratic Union and the Free Democratic Party, junior partner in the ruling coalition in Berlin, over the deal they agreed last month with their 16 eurozone partners in Brussels.