Yawn to China and ‘where do we go now’ with Greece?

Asian markets mostly gave a yawn to another attempt by Chinese authorities to stimulate growth with their RRR cut. The Shanghai index in particular traded down by .6% to a 3 1/2 week low and copper is falling to a 3 month low. The main worry this morning though is again Europe with Greece likely headed for another election next month with it basically being an up or down vote on its Euro membership. The growing possibility of Greece saying bye bye has put the entire region into the realm of the unknown in terms of the economic ripple effects. Spanish and Italian bond yields are spiking and the cost of insuring against a Spanish default is now more expensive than for Hungary. The European bank stock index is dropping to a 3 month low and the iTRAXX European financial CDS is wider by another 16 bps. The US$ and Treasuries are again the beneficiary of the stated overseas worries with the DXY index higher for an 11th straight day. With respect to the economic collateral damage to what’s going on overseas on an already lackluster US economy, we’ll see the 1st May industrial numbers this week from the NY and Philly mfr’g regions.

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