Europe/China/Canada

European bank stocks are trading poorly again with Soc Gen in particular falling to the lowest level since Mar ’09. The European bank stock index is trading down more than 2% as the debt of Italy, Spain, Portugal, Greece are lower. I specifically didn’t mention Ireland as they’ve been a credit standout of late as the market grows more confident in their ability to deal with their debt issues. Greek 5 yr CDS is rising another 200 bps to above 3200, up 1000 bps this week alone. Italian CDS is trading near their record highs. The G7 meets today and tomorrow and I don’t expect anything new. Greece will run out of money again within weeks if they don’t get their next tranche of money from Bailout 1. China’s Aug CPI rose 6.2%, in line with expectations and down from 6.5% in July. PPI rose 7.3%. IP was up 13.5%, a touch below estimates while Retail Sales were up 17%, in line. The Shanghai index was little changed as while the PBOC may be done tightening policy, inflation rates still this high keeps them from easing. After Australia reported a disappointing jobs report yesterday, the other major commodity country, Canada, also missed estimates with an unexpected drop in overall jobs.

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