Today we will start our day on the “off” side of the ‘risk on/risk off’ teeter totter.  Negative headlines out of Europe and a report from China saying it has no plan to provide renewed stimulus, have enabled the pessimists to take the lead.  The Euro has continued to fall against all 16 of its major currency pairs as Spain continues to struggle with its banking system.  The Spanish government’s plan to indirectly tap into the ECB through its central bank to recapitalize its troubled lender Bankia has been rejected by the ECB as unacceptable.  This reality has raised the contagion fears pushing stocks lower and also helped push the EUR/USD near to a two year low, as seen in the chart attached.

North American equity futures are down almost a full percent this morning as the risk off mood…

The bad news continues out of Spain this morning as retail sales there fell 9.8% YoY and was down 3.8% in March. This and their growing banking crisis have caused Spain’s borrowing costs to jump to near record highs. European share markets are mixed but mostly up this morning pushing North American equity futures up ahead of the first day back for the US in a shortened holiday week.

China and Japan have announced plans to start trading the Yuan directly against the Yen in June, as the two countries try to promote more trade between Asia’s two largest economies. This means they will no longer need to use the USD as an intermediary between the two currencies.

There are no reports out of Canada today so markets will key on two reports out of the US, first one being S&P Case Shiller…

This morning European share markets are up reportedly on the back of comments from Angela Merkel. The markets are interpreting her comments as Germany leaving the door open to shared debt through some sort of Eurobond and the latest polls from Greece show the ‘pro austerity’ political party is back in the lead.  Both news items related to this look to be short lived and therefore the resulting enthusiasm. Spain’s fourth largest bank by assets, recently created by a forced merger between 7 banks, has asked the government for a €19bn bail out.  This could be the catalyst for Spain and whether it will need to ask for a bailout of its own as it tries to get its own debt to GDP ratio under control.

The most recent and continued fighting in Syria is garnering more international attentions as the UN…

The Euro has fallen to the lowest level we have seen against the USD since August 2010 ahead of another EU summit, where little is expected in the way of new policies to stem the sovereign debt crisis or fears of contagion. There should be no shortage of headlines later today out of Europe after the EU summit adjourns and the media starts to clamor for quotes. 

The Bank of England released the minutes from its last meeting and showed they were unanimous in keeping rates unchanged at 0.5% and voted 8-1 to keep its bond purchasing program (QE) unchanged at £325bn. The recently published OECD report on the global economy has suggested that the BoE cut rates and/or raise its bond purchasing target. 

Commodities continue to slide this morning as gold eyes the $1500 level as seen in the chart…

Equity markets in the USA were up between 1% and 2.5% yesterday in response to comments received from China that they support the current form of the EU and their willingness to help Europe keep all of its current members in the EU.  It is also being speculated that China will accelerate infrastructure spending to offset the economic slowdown in Europe.

The Paris based Organization for Economic Co-operation and Development (OECD) has reported its economic outlook.  They have reported that they see global growth easing to 3.4% from its original forecast of 3.6% last year.  They are also recommending that the UK should do more in the form of QE and even consider cutting their interest rates.  The OECD also recommended that Canada raise interest rates in the fall and continue to raise rates due…

European equity markets are mixed this morning after the expected downgrade of 16 Spanish banks by Moody’s and Fitch’s downgrade of Greece that we received late yesterday.  Equity futures are currently up here in North America at the moment as the Face book effect is likely propping things up and will most likely dominate most of the news headlines today with its IPO.

G-8 leaders are scheduled to be meeting this weekend to discuss the European crisis and its impact on the global economy.

With no reports out of the US today, the release of the Canadian CPI may get more attention than usual as we head into a long weekend.

A Harvard Medical School study has determined that rectal thermometers are still the best way to tell a baby's temperature. Plus, it really…

The train wreck that is the European economy continues to drag markets down and fear looks as though it may quickly be turning into panic here. Spanish yields continue to rise above 6%, pulling Italian yields with them which are now at 5.883%. To make matters worse there is a constant flow of headlines coming out of Europe that are feeding already jittery markets. This situation leaves the market poised to over react to any news that may come from a European “official”, only to have that news refuted moments later by another “official”. 

Japan’s QoQ GDP was reported higher than expected at 1.0% while its GDP price index was down 1.2%, both good things for JPY. 

North American markets will turn their focus away from Europe for a nano second today to watch initial jobless claims and the…

Greece continues to be the focus and Europe continues to be in the cross hairs of investors as fear has taken hold of markets and the populous. Reports of initial runs on banks in Greece by citizens are being overblown by our fear mongering media. Greece has made good on its bond payments, for now and President Papoulias is meeting with party leaders to form a caretaker government until the new elections can be held on June17.

UK unemployment numbers came in much better than expected, and the unemployment rate dropped from 8.3% to 8.2%. Outside of that it was really just more of the same out of Europe.

Markets will get a look at the housing industry today with numbers out of the US due this morning, but more importantly we will get the minutes from the latest FOMC meeting this…

Negative market sentiment we highlighted yesterday morning in our report continued to weigh on the markets for the day and to top it all off late yesterday Moody’s cut their credit ratings on 26 Italian banks, including the country’s largest lender Unicredit. The downgrades came only a few hours after Moody’s said they would be delaying some bank downgrades in light of J.P Morgan’s $2bn trading loss as they investigate what may have happened there. 

Europe has technically avoided a double dip recession. They reported growth in the first quarter of 2012 of 0.0%, compared with the posting of a contraction of 0.3% to finish off 2011. The only reason they were able to stave off the recession label was a result of Germany’s better than expected 1st quarter GDP growth at 0.5%, or five…

JP Morgan Chase announced yesterday it has lost $2bn in credit swap trades; this has pushed their stock lower and is weighing on the US equity market as a whole as concerns rise of more losses at other financial institutions. China has reported industrial production growth fell to 9.3% (YoY), down from 11.9 in the previous month; this is raising concerns about the global economy. The EU has forecasted that the eurozone economy will contract by 0.3% this year; they also said that Spain would have a budget deficit of 6.4%. Spain is going to make their banks set aside more cash, to offset a swell in bad loans there coming due from the housing market crash last year. 

North American trading will continue to watch developments in Europe with one eye and watch this morning’s economic reports with…