Overnight US indices have turned downward indicating that the pause of the last two days was a sign of exhaustion and that last week’s gains may have been the climax of the rebound that started back in mid-October. The runs at new highs are starting to look more like double tops while today’s declines in Europe and North America suggest a downward correction may be getting started. The big story of the day so far has been the selloff in Sterling after the Bank of England cut its inflation and GDP forecasts through 2015 indicating that the pressure on the central bank to raise interest rates has subsided. Forecasts assumed a start to increases in the summer quarter, making an increase before next spring’s UK election highly unlikely. The main theme running behind the selloffs in stocks and sterling is the risk of continued weakness in the Eurozone economy, and despite all its talk, the ECB doesn’t seem to be doing much about it. Between the first week of October and the first week of November when the Fed ended QE3 and the ECB started its asset buying program, the “hawkish” Fed’s balance sheet increased by $36B while the “dovish” ECB’s balance sheet decreased by €14B. This means that the bond buying program like the September targeted LTRO loans have been feeble at best and appear to be more talk than action so far. USD has also been backsliding today, underperforming all other majors except for the freefalling GBP. Gold, along with JPY and resource currencies led by NZD and NOK with AUD and CAD trailing have been taking advantage of the respite to rebound. Grains also continue to rally while crude oil is flat and natural gas is slipping back a bit in a normal trading correction. It’s still quiet for economic news in the US but Macy’s has kicked off earnings for retailers with a mixed report as earnings beat the street even though sales were soft. We continue to see earnings come out from large companies in Canada. This evening has the potential to be active for Asia Pacific trading with a number of key economic reports due from China, Japan and New Zealand. Corporate News Macy’s $0.61 vs street $0.51, sales $6.20B vs street $6.35B, cuts FY EPS guidance to $4.25-$4.35 from $4.40-$4.50 Loblaw $0.90 vs street $0.87 EnCana $0.38 vs street $0.39 Silver Wheaton $0.20 vs street $0.21 Economic News Economic reports released overnight and this morning include: UK jobless claims (20K) as expected UK average weekly earnings 1.0% vs street 0.8% UK unemployment rate 6.0% vs street 5.9% UK 3M employment change 112K vs street 125K vs previous 46K UK Bank of England inflation report forecasts 2014 consumer prices cut to 1.2% from 1.9% 2015 consumer prices cut to 1.4% from 1.7% 2015 GDP cut to 2.9% from 3.1% Forecasts assume first rate increase in Q3 of 2015 rising gradually toward 2% by end of 2017 Canada Teranet house prices 5.4% unchanged Australia consumer confidence 96.6 vs previous 94.8 Australia wage inflation 2.6% as expected Economic reports due later today include: FOMC members Plosser and Kocherlakota speaking today