Important, but far less

Once again China's Central bank, the PBoC conducted its second liquidity withdrawing operation (repo) for the second day in a row after 8 months of small injections of cash in to the system, this is sort of akin to the F_E_D halting or slowing the pace of QE, it seems the dangers of inflation and the end game of accommodative policy are e taking front and center stage.

As mentioned earlier, China was down for the 3rd of the 4 days it has been open this week since last week's holiday for the new Chinese Lunar New Year. The important part is that China is taking liquidity out of the system and the direct results are being felt in the Shanghai Composite.

In Europe, more bad news for the core, Germany; Services and Manufacturing PMI both missed consensus, coming in light, but above contraction, still a disappointment given the recent negative GDP print in the one country in the EU that has been expected to remain immune and the safe haven of choice, although judging by the rising yields, few are finding comfort in the safe harbor of German bonds.

France's Manufacturing PMI also missed, although it did rise, just not as much as consensus and still remains well below 50 in contraction at a new print of 43.6. Services missed at 42.7, down from 43.6 and well off consensus of 44.5-also in contraction.

Europe's Composite Man. PMI missed at 47.8 on consensus of 48.5 (in contraction), Services missed at 47.3 on consensus of 49.0 and down from the previous of 48.6. These PMIs do not bode well for Q1 GDP which if Germany prints another negative, will enter recession; at this point France seems to be a lost cause, the second of the core EU countries, now joining the PIIGS, soon to be called the F'PIIGS (insert your own acronym).

In the US, Initial Claims saw last week's original 341k (revised to 342k -last week, CT and IL were estimated) saw a jump this week to 362k with the Department of Labor estimating (ready for it?), Hawaii, D.C., Virginia and the most populous state, California which means next week will (as usual) likely be revised even higher, but as Bernie says, the economy is showing signs of improvement. Falling off the extended U.E. benefits were 232k, bringing the number to 1.8 million from 3.2 million a year ago, you have to wonder what these people are doing, how bad it is for them? One thing they aren't doing according to yesterday's FoxConn news is buying Iphones.

Today we also saw the Philly F_E_D expected to print at +1.0, fall from -5.8 to (wait for it....) -12.5 (again, Bernie and the F_O_M_C feel their job here is nearly done-after 4 years of unprecedented accommodative policy, unemployment, Initial Claims are almost exactly where they were a year ago). For perspective, the Philly print was the biggest miss in 9 months, the worst print in 8 months, but things are getting better.