Squawk Morning Briefing: Over There

As we kick off the new quarter, markets in Europe seem to be taking the forefront along with economic data from the region. It seems only last week there was enthusiasm at the drastic budget cuts in Spain. Perhaps today those same budget cuts are being seen with more of a skeptical eye. After all, today saw the final PMI figures for the Euro zone coming in at 47.7, signaling a contraction. While this was the consensus number, attention is being paid to a steep drop in the new orders component which may foretell ongoing declines in manufacturing and other economic activity.

It is within this backdrop that one must evaluate the new Spanish budget which many were lauding just a few days ago. Where will new demand come from? The “commitment” to the “firewall” also sounds delightful on its face, but the details make sound like nobody is really wanting to stand up and commit any more than has already been pledged to pump up failing economies and prevent contagion.

Whether or not these observations are the cause for selling in European markets overnight and a drop in U. S. equity futures cannot be known. What we do know is that the directions of five-wave and three-wave moves should tell us the direction of trend once they become clear. This is still a tricky spot and we want to see unambiguous action.

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