Overnight

Finally Chinese PMI and HSBC's Chinese PMI start moving in the same direction. Overnight China's PMI fell for the first time in six months, HSBC has had Chinese PMI falling for several month now, at least 3 consecutive that I remember while the Chinese number kept moving higher, I don't know what changed, but the official Chinese version in one month reverted almost all the way back to the several months of HSBC's declines. This was the largest drop in Chinese PMI since early 2010 from 53.4 to 50.4 on consensus of 52, a massive 3 point drop, but still hanging just slightly above 50 (below 50 means contraction in manufacturing).

We proposed there was a problem in China last year before any data was out based on the way commodities were trading, two weeks later Manufacturing PMI and then Services PMI proved us right. I have said many times that China's greatest fear is civil unrest among their population, that is one of the reasons I have felt the Chinese PMI was diverging so badly from the HSBC version. However with Europe clearly on the ropes, it is easier for the government to make the case it is not their fault as their largest trading partner is slipping below the ocean. First it was Emerging economies that would save the world, then it was the Chinese Global Growth locomotive, now?

ES seemed to drop about 6 points on that news.

Next Europe and particularly the UK and Spain had very weak PMI readings overnight; both the UK and Spain saw the lowest readings since May of 2009! This was also the second largest UK PMI decline on record. The Euro zone print is below 50, manufacturing is in contraction.

There was also some polls in Greece showing Syriza way ahead and some chatter from Syriza that scared the markets overnight as that election is about 2 weeks away.

By far the biggest economic event was this morning's Non-Farm Payrolls.
Released On 6/1/2012 8:30:00 AM For May, 2012

	Prior	Consensus	Consensus Range	Actual
Nonfarm Payrolls - M/M change	115,000	150,000	95,000  to 206,000	69,000
Unemployment Rate - Level	8.1 %	8.1 %	8.0 % to 8.2 %	8.2 %
Average Hourly Earnings - M/M change	0.0 %	0.2 %	0.1 % to 0.2 %	0.1 %
Av Workweek - All Employees	34.5 hrs	34.5 hrs	34.5 hrs to 34.5 hrs	34.4 hrs
Private Payrolls - M/M change	130,000	164,000	100,000  to 209,000	82,000

This was a HUGE MISS, now the 3rd in a row. NFP printed at 69k on consensus of 150k, furthermore Aprils 115k was revised lower to 77k!

This did ES in and we still Have ISM at 10 a.m.

How's that QE sentiment? GLD opened 2.45% higher, that's what the market thinks of the June F_O_M_C meeting, that this NFPO print was bad enough to give Bernie the green light to print. We'll see how the market reacts to that later after morning trade wears off, we are in the season where bad news is good news and really bad news is great news as the QE addicted longs hope and pray that this print will send the market surging on a June QE3 announcement.

Keep an eye on gold.