Yesterday’s slump in Australian markets continued through European trading. North American indices, meanwhile, have been mixed with the Dow up slightly and the NASDAQ down slightly. Although QE money continues to follow the path of least resistance into the stock market, Evans the breadth of the rally has started to narrow with weakness emerging at the margins. This has raised questions about how sustainable the current rally may be even if the Fed keeps QE going. Some of the highest flyers of the last few weeks and months have started to crack in a major way. The biggest flameout has been Bitcoin, a virtual currency that soared up toward $900 overnight which has since collapsed back toward $560 within a few hours and then rebounded back above $600. This appears to be a classic blow off top and bubble burst. Think about silver’s run at $50 and subsequent collapse as an example. A change in momentum has also been seen in some popular technology stocks. While the blue chip core of the market has continued to climb, the tech sector has started to weaken. For example at the end of Monday, Tesla Motors was down 37% from its September closing high while Facebook and Twitter were down 15.4% and 17.7% from their highs. In currency markets, we continue to see capital flowing back into resource currencies, particularly AUD and NZD while flowing out of defensive currencies and keeping both JPY and gold on their heels. As trading moves into Europe and North America tomorrow, focus turns to central banks once again and GBP and USD could be active with Bank of England and FOMC minutes. The two central banks have been moving in opposite directions with Governor Carney and an improving UK economy taking a more hawkish tone at the BoE and incoming Governor Yellen apparently set to keep the Fed firmly in the dovish camp. Today, Chicago Fed President Evans, who had been moving toward the fence moved fully back into the dovish group suggesting he’s “not in a hurry” to start tapering, and outgoing Fed Chair Bernanke speaks in a couple of hours. US retail sales may also give an indication of whether the government shutdown affected consumer spending. Later in the week, flash PMI numbers may give a better indication of where the broader global economy is heading. Economic News Highlights of overnight announcements include: Germany ZEW current 28.7 vs street 31.0 Germany ZEW expectations 54.6 vs street 54.0 vs previous 52.8 Eurozone ZEW expectations 60.2 vs previous 59.1 Turkey interest rate decision 4.50% no change as expected Upcoming significant announcements include: 8:45 am AEST NZ PPI input previous 0.6% 8:45 am AEST NZ PPI output previous 1.0% 10:50 am AEST Japan trade balance street (¥854B) 9:30 am GMT Bank of England minutes 8:30 am EST US retail sales street 0.1% 8:30 am EST US consumer prices street 1.0% vs previous 1.2% 10:00 am EST US existing home sales street 5.15M 10:30 am EST US crude oil inventories street 1.0 mmbbls 10:30 am EST US gasoline inventories street (0.3 mmbbls) 2:00 pm EST US FOMC minutes

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