Bottom Line: I still don't see where this ends well. Play the news cycle if you are so inclined, but keep one eye on the key issue. Is Europe working to resolve their fundamental internal imbalances with anything other than deflation? As long as the answer continues to be "no," be afraid. Be very afraid.Read it at Tim Duy's Fed Watch
Europe Still Heading For Collapse
by Tim Duy
Bottom Line: The global economy is hitting turbulence, just as the US data turns more sanguine. Can this decoupling be sustained as Europe sinks deeper into recession? I would like to think so, but remain very cautious that the US can escape without some significant cuts and bruises. So far, the Fed remains in a holding position. I expect them to stay there until more significant signs of economic distress emerge.Global Growth Struggles, Fed Stands Still
Duy points out that the fly in the ointment here is some shock that impacts the US, like the impending failure of a US TBTF institution, forcing the Fed's hand.