Morning stuff

The China led market correction continues as the Shanghai index fell to a 3 month low and the Hang Seng dropped to a 5 month low. Both are down about 12-13% from their ’09 high in response to policy steps by China to cool loan growth. After the Nikkei closed, S&P revised Japan’s sovereign credit outlook to negative from stable due to their “diminishing economic policy flexibility” with net debt at 100% of GDP which may rise to 115% over the next several years. Japan’s CDS are rising 3 bps to 87, the highest since Apr ’09 and in line with the Czech Republic. Germany’s IFO business confidence # rose to the highest since July ’08 and was a touch more than expected and French consumer spending was above forecasts but the euro is lower on the global market pullback. After 6 quarters of m/o/m declines, the UK economy grew in Q4 by a whopping .1%, .3% less than expected. The FOMC begins their 2 day meeting and oh to be a fly on the wall.

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