The cumulative effect of a number of headwinds came together today to send US and European stock markets sharply lower. The Dow and the Dax each lost well over 200 points leading the way downward. Three major factors came together to create a perfect storm for stocks today. First, better than expected US economic numbers (retail sales and jobless claims) indicated the US economy is shrugging off the effects of winter and accelerating again, confirming that there is no major reason for the Fed to stop tapering at its meeting next week. Second, worse than expected Chinese retail sales and industrial production confirmed the slowdown indicated by data released last weekend. Despite the week data out of China yesterday, many of the markets most sensitive to that country’s economy such as China A, copper and USDCNH have stabilized, suggesting selling pressure may be getting washed out for now. The Hang Seng, however, remains well above its 52-week low and technically vulnerable. Third, tensions in Ukraine continue to simmer and with diplomatic efforts apparently getting nowhere ahead of this weekend’s end to the Paralympics in Sochi and referendum in Crimea on joining Russia, political risks have been moving back to the front burner. The reaction in the marketplace today was mixed as CHF and wheat gave back some of yesterday’s gains while gold and JPY continued to advance. Regardless, the volatile situation could keep these markets active well into next week. The one group that bucked the defensive trend today has been the resource Dollars, NZD (interest rate increase), AUD (strong employment report) and CAD (strength in new house prices) all responded favourably to local market factors. Today’s trading could be influenced by news scheduled from New Zealand, Singapore and Japan, but as the weekend approaches focus may turn to positioning ahead of potential weekend developments in Ukraine. Economic News Significant announcements released overnight include: US retail sales 0.3% vs street 0.2% US jobless claims 315K vs street 330K US natural gas storage (195 BCF) vs street (199 BCF) Brazil retail sales 6.2% vs street 4.8% Canada new house prices 1.5% vs street 1.3% Upcoming significant announcements include: 8:30 am AEDT NZ business PMI previous 56.2 2:00 pm AEDT Singapore unemployment rate previous 1.8% 3:30 pm AEDT Japan industrial production previous 10.6% 4:00 pm AEDT Singapore retail sales street (3.7%) vs previous (5.5%) 4:00 pm AEDT Singapore ex auto street 2.6% vs previous 0.3% 7:00 am GMT Germany consumer prices street 1.2% 9:30 am GMT UK trade balance street (£2.2B) 9:30 am GMT UK construction output street 5.2% 8:30 am EDT US producer prices street 1.2% 9:55 am EDT U of Michigan confidence street 82.0

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