“The global economy has weakened.”
That’s the phrase we will be hearing repeatedly over the next few weeks. Earnings for the quarter begin next week with Alcoa and every time an executive utters that phrase, someone is going to be selling stocks.
If you want a better sense of what they will be saying, have a look at the RBA statement.
The outlook for growth in the world economy has softened over recent months, with estimates for global GDP being edged down, and risks to the outlook still seen to be on the downside. Economic activity in Europe is contracting, while growth in the United States remains modest. Growth in China has also slowed, and uncertainty about near-term prospects is greater than it was some months ago.
Before that we get a triple-header of risk events with ADP tomorrow, ISM services Thursday and non-farm payrolls on Friday.
Unless all three surprise to the upside or Spain asks for a bailout, I just don’t see a positive catalyst for risk.