The global stock markets really took a dive on the UK GDP numbers which showed a contraction of .5% QOQ. This was greater than expected though the market was looking for a negative number. This is the first negative quarter number since 1992 and is plunging to levels seen during the 1990 recession. Sterling has fallen to levels seen in 2002. The capital flows which have driven the British and London economy are gone. Since mid-July when it was at $2 the pound has lost over 20%. The currency is looking similar to Bank of England rout in 1992 when the currency went from just under $2 to $1.52 and finally hit a low of $1.42.
All of the European economic numbers released today have fallen below expectations. The European PMI which has been going down for a year has hit multi-year lows. With all of this bad news, there is no reason that earnings to stay robust. Liquidity is not going to solve this problem.
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