There are a few economic and market related items worth pointing out and none of them look great.
- Our old Euro Zone issue. You have heard a lot about Greece lately, but the truth is that the credit risk spreads are blowing out to all time wides for all but Spain:
- The economic news continues to be negative. A particularly poor reading for the Philadelphia Fed Index and the Chicago National Activity Index. Overall the economic surprises have turned to the sour side:
Citigroup Economic Surprise Index
- Our perceived economic savior, China, seems to be losing love from the media. Bloomberg just reported that Chinese companies are cooking the books and Jim Chanos believes they should be shorted. In addition, inflation is becoming a real problem in asian countries. Vietnam reported inflation of nearly 20%. The Shanghai composite is down almost 10% from its recent high. During the crisis, this proved to be a decent leading indicator:
- US equity markets have been trading weakly. The S&P 500 is own only 4% since its peak, but it seems almost certain that we will test the 1294 level. A breakdown shows no significant technical support until about 1250:
