Europe is not growing. German GDP was 0.1% q/q and Eurozone GDP was 0.2% q/q. At this pace Europe is going to fall into recession before the end of the year. Markets in Europe are having a second thought about the rally. It is up to Merkel/Sarkozy meeting to provide the catalyst for further gains. Should nothing concrete and groundbreaking come out of that meeting, markets in Europe will retest the lows in a matter of days.
UK inflation is alarming. Compounded with stagnation it is a sure recipe for disaster. Riots in London and other cities brought the social instability issues forward. Is this the beginning of something scary and uncontrollable? I sure hope not!
US Capacity Utilization and Industrial Production was better than expected. Import prices were higher by 0.3%. FED is praying for none of that price instability as they are getting ready to embark on QE3. Tomorrow we will get PPI and CPI on Thursday. Those numbers need to be in-line but not much higher, otherwise FED's hands will be tied.
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