Friday’s failed rally attempt in the US and subsequent afternoon slump could have been written off as sloppy trading on a low volume day. Today’s shellacking so far, however, confirms that the big Santa Claus rally last month appears to have sopped up all of this year’s seasonal gains leaving stocks vulnerable to corrections to kick off the year. Friday’s weakness came in the wake of soft manufacturing PMI reports out of the UK and US which had been particularly disappointing as those two economies had been among the few bright spots last year. Today’s weakness appears to be driven by traders focusing back on problems that have been in the spotlight for some time. Uncertainty surrounding the upcoming election in Greece where the Euroskeptic Syriza Party has been leading in the polls compounds the contintent’s existing economic problems. With German inflation coming in below expectations and nearing zero, deflation fears have also been on the rise, putting even more pressure on the ECB to act more decisively at its meeting later this month. On the interim, fears that policy makers won’t do enough soon enough has pushed European indices down to start the week, and sparked another selloff in EUR and CHF. With no major news out of North America, US indices have been following their European peers lower in an emerging correction. Growing uncertainty in Europe to start the year has lit a fire under defensive plays. Precious metals and JPY are climbing today with silver leading the charge on a 1.6% gain. On the other hand, political and economic instability plus a market share war have crude oil under pressure again with WTI losing another 3%+ and Brent breaking down through $55.00. Falling oil continues to pull down NOK. CAD has been resisting the pressure so far but could give way if WTI tests $50.00. Interestingly, although currency action would have me think the Eurozone may be heading for a widespread calamity, the bond market is telling a different story. While Greece’s 10-year treasury yield has popped back up above 9.0%, yields for other major European countries have barely moved up at all over the last few weeks. Portugal is still below 2.5% while Germany is near 0.5%. This suggests that so far, bond markets think most of the risk remains contained to Greece itself at the moment. The first week back to trading in any year is commonly active but with so many moving pieces at the momentum, this January has the potential to be particularly busy with the potential for trading opportunities in both directions depending on how news and events shake out. Corporate News There has been no major corporate news so far today. Economic News Economic reports released overnight and this morning include: Germany consumer prices 0.2% vs street 0.3% UK construction PMI 57.6 vs street 59.0 Spain unemployment (64K) vs street (80K) Australia manufacturing PMI 46.9 vs previous 50.1 Japan manufacturing PMI 52.0 vs previous 52.1 Japan vehicle sales (8.8%) vs previous (13.5%) Economic reports due later today include: There are no major reports or speeches scheduled for later today