Germany Pours Cold Water On ESM

The markets are mixed in early trading, with the Nasdaq up a little and the S&P a tad lower.  Overnight action in Asia was mixed despite reports coming out that the Chinese authorities are considering further monetary easing as inflation cools.

In Europe, the euro got a boost from French President Hollande defending the euro.  However subsequent reports indicated that the Bundesbank poured cold water on some of the ideas such as the ESM getting a bank license and said that monetary policy should focus on price stability. 

German retail sales grew +2.9%, while Spanish retail sales contracted by -5.2%.  Eurozone unemployment remained at 11.2%.

In US economic news, consumer confidence rose to 65.9 vs. 62.7 last month.  And the Chicago PMI also rose to 53.7 vs. 52.9 last month.

Stocks rising on earnings: IPGP, CRUS, PFE, LQDT, CRS, AMG, X, VLO, CMI

Stocks falling on earnings: STX, BP, COH, ADM, ALLT, ECL

The 10-year yield is back down below the 1.50% level to 1.47%.  And the VIX is slightly higher to 18.35.

Trading comment: This is a tough juncture here ahead of both the Fed and the ECB meetings this week.  The market is already anticipating either more quantitative easing or some measures by the ECB to address the debt issues with Spain, Greece, etc.  That sets up the market for some potential disappointment, or at least a sell on the news reaction.  As such, we are maintaining our defensive posture in portfolios at this juncture.