Overnight

ES continued its slide from the negative divergence I posted in the early evening then again around 11:30-ish. In total, ES has lost about  12 points.

The bad news started in Australia, posting a second consecutive deficit of $480 mm on consensus of a $1.1 bn surplus. Then this stunner from Bloomberg

China Has Biggest Trade Shortfall Since 1989 on Europe Turmoil

There have been a series of such events, Japanese Trade Deficit recently hit a record, Australia has first trade deficit in 11 months, Brazil posts first trade deficit in 12 months, US trade deficit hits 3 year record, last night it was China's turn.

In the European early session, Germany posted a slowdown in factory orders (remember the Euro-zone exists purely as a free trade zone for German exports), the number came in at .3% on consensus of 1.5%.

Things turned much uglier after the next big worry in the EU, Spain, tried to issue $3.5 bn in bonds with maturities longer than the 3 year LTRO loans. They only raised 2.6 billion and sent the bond curve in to a tizzy with CDS rocketing higher. Their 10 year spiked to 5.68% after the auction which is closing in on the 6% threshold as yields have been rising steadily now for well over a week. 

Add to that continuing problems in Portugal, from Reuters

European policymakers should be ready to provide more help to Portugal some time in the future, European Economic and Monetary Affairs Commissioner Olli Rehn said in a Finnish television interview shown on Wednesday.

And from China Daily

China's GDP likely to have slowed in Q1

Also this a.m. the ECB keeps rates unchanged.

UK PMI came in stronger than expected (they don't use the Euro).

The US ADP report came in almost exactly at consensus and was a non-event.

And that's where we stand until the ISM services for the US comes out at 10 a.m.