Global Storm Clouds Darken

The mood around the globe has turned yet again on the Fed’s growth estimates, China's slowdown and Spain's debt.

After yesterday’s Federal Reserve meeting, markets took little solace in the extension of Operation Twist as, overnight, more bad news hit the markets.

The Fed downgraded growth estimates to 1.9%-2.4% from previous estimates of 2.4-2.9% as it announced more long-term bond buying through the end of the year.

In Asia, HSBC reported China’s PMI at 48.1, well below the 50 level that separates expansion from economic contraction.

In Europe, Spain went to the open market with 2 Billion in Euros and sold more than planned but at significantly higher yields from previous sales. Two-year bond yields doubled while 10-year yields dropped slightly to just below the critical 7% level to 6.6%.

In Greece, the new government appears to be pressing ahead with plans to renegotiate its deal with the EU while Europe continues to resist the idea.

Merkel Still Says 'No!'
German Chancellor Angela Merkel says 'no', again, to the notion of sovereign bonds while French President Hollande thinks buying bonds is a good idea to keep yields at affordable rates.

More meetings are going to be held this week in Europe as leaders continue efforts to get in front of this fast moving crisis.

The Markets
The Eurodollar (NYSEARCA: FXE) declined overnight to $1.2666 while Asian indexes dropped with the Shanghai Composite (NYSEARCA: FXI) declining 1.4% and Hong Kong down 1.3%.

European stocks declined with Spain under pressure over its bond sales and the Ibex (NYSEARCA: EWP) declining.

Germany’s DAX (NYSEARCA: EWG) was off 0.35% at mid-day while the S&P 500 (NYSEARCA: SPY) correctly predicted a lower open on Wall Street.

Oil (NYSEARCA:USO) dropped to near $80/bbl.

Bottom line:
Global growth continues to slow, Europe remains in trouble and seemingly unable to get a grip on its debt crisis. Global storm clouds darken.

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