If May Day is when Europe celebrates labor and jobs (if any), November 14 is its opposite, bizarro cousin as today Europe wakes up to a dead(er than usual) economy. The reason: virtually every European country is on strike. From BusinessWeek [25]: "Spanish workers staged a second general strike this year as unions across Europe prepared the biggest coordinated protests yet against budget cuts that policy makers say are needed to end the region’s debt crisis. In Spain, unions said most auto and metal workers joined the strike, even as power demand was just 13 percent below usual. One of Portugal’s two biggest labor groups also called a strike, partial walkouts are planned in Greece and Italy, and French unions are urging workers to join protest marches. “This is a strike against the suicidal economic policies of the government,” Ignacio Fernandez Toxo, head of Spain’s CCOO union, told supporters late yesterday." In other words, Europe's economy which is already doing swimmingly, is about to see 1/60th of its Q4 GDP removed as virtually no economic goods or services are produced today.

And speaking of "swimmingly", the Greek economy shrank 7.2% in the third quarter from a year earlier, the Greek statistics authority said on Wednesday in its first estimate for the period. The authority said Greece, in its fifth year of recession, contracted further than the 6.3 percent 12-month recession posted for the second quarter of 2012. In other words, the economic contraction accelerated in the quarter ended September 30.

Elsewhere [26], "Euro-area industrial production dropped the most in more than three years in September, led by double-digit declines in Portugal and Ireland. Output in the 17-nation euro area fell 2.5 percent from August, when it increased 0.9 percent, the European Union’s statistics office in Luxembourg said today. Economists had projected a drop of 2 percent, according to the median of 35 estimates in a Bloomberg News survey. From a year earlier, September output slumped 2.3 percent. European companies are struggling to maintain sales and earnings as the euro-area economy weakens under pressure from the fiscal crisis and faltering global growth." In other words, the whole world is slowly grinding to an economic halt, and people in the socialist continent celebrate by striking, coming soon to an America near you.

In other news, the IMF said that it wants a "real fix, not a quick fix [27]’ in Greece. "Speaking during a visit to Malaysia, Lagarde said that all of Greece's partners shared the same goal of putting the country's recovery programme back on track. "All partners share the same objectives and the same concerns, in other words (that) Greece is ... returned to economic stability, can reaccess markets as soon as possible," Lagarde told reporters. "Obviously from the IMF's perspective, we expect a real fix, not a quick fix, and that means clearly debt that is sustainable as quickly as possible." So... what the IMF has been doing in Greecefor the past 3 years, that was a "real fix"?

Concluding today's bad news rout from Europe was the UK, where jobless claims rose more than expected as the labor market slowed, the BoE cut the UK outlook [28]and warned of a risk of "persistent low growth", and Germany auctioned off [29]its first negative yield bond since July.

All in all, one can see why equity futures are on fire.

/sarc

The full recap from Deutsche Bank

One week on from the US Presidential election result, and we’re no closer to a solution on the fiscal cliff with 48 days left in the year. According to White House Press Secretary Jay Carney, Obama will begin budget negotiations by calling for $1.6trn in additional tax revenue over the next decade, double the $800 billion discussed in talks with GOP leaders during the summer of 2011 (which ultimately fell apart). The seemingly hardline approach sets the scene for tough negotiations with congressional leaders on Friday. The President has called a press conference today where he is likely to provide more detail on the aforementioned tax revenue increases which are reported to include raising taxes on corporations and allowing tax cuts to expire for top income earners (Washington Post, WSJ).

In terms of the markets, a late sell-off in US equities led by technology stocks (-0.90%) marked an otherwise quiet day. The S&P500 closed -0.4% lower, after shedding 0.65% in the final hour of the session. This took us to the lowest level since August 2nd. President Obama’s tweet, in the final hour of trading, that "I'm committed to solving our fiscal challenges. But I refuse to accept any approach that isn't balanced” didn’t help markets hoping for a more conciliatory tone, but probably summed up the state of play of negotiations thus far. US 10yr treasury yields closed at 1.594%, slipping back below the 1.60% mark, and threatening to break out of the 1.6% to 1.8% trading range that has held since August.

Ahead of today’s FOMC minutes, Fed vice-chair Janet Yellen commented that the Fed is considering tying Fed policy to inflation and unemployment targets. Yellen added that the Fed has a target jobless rate range of 5.2% to 6% and that employment targeting may mean that the Fed will tolerate a temporary deviation from inflation ranges. If such a policy comes to pass this is quite a big deal and would need even more money creation.

Asian markets are relatively mixed overnight with gains seen on the Hang Seng (+0.85%) and Nikkei (+0.2%) but the Shanghai Composite (-0.25%) and KOSPI (--0.1%) are underperforming. China’s current President Hu Jintao declared the 18th national party congress officially over today. All eyes are on the final makeup of the Politburo Standing Committee, the highest decision making body of the Party, which will be unveiled tomorrow. Markets are hoping for a substantial representation of reform-minded members. The latest power data in China showed electricity consumption rising 6.1% yoy in October, up from September’s low of 2.9%yoy, providing incremental confidence to some on the trajectory of the Chinese economy. The benchmark Asian IG credit index is trading flat while the Australian dollar is trading marginally higher (0.1%) against the greenback.

Over in Europe, the Stoxx600 closed 0.79% higher led by gains in the peripheries (IBEX +1.66%, MIB +1.4%). Most of the gains came late in the session on the latest Greek headlines suggesting that the troika is bundling the next 3 disbursements for Greece into one payment (totalling more than EUR44bn). However investors were (once again) disappointed later in the US session as German FM Schauble and Greek PM Samaras both said the idea was only being discussed at this stage.

Schauble added that while it was “logical” to combine disbursements, control mechanisms were needed to ensure that Greece keeps to reforms. 10-year Spanish bond yields rose 7.5bp at one point yesterday (to just under 6%) before rallying to close 4bp lower at 5.85%, helped by a re-run of reports that a Spanish bailout is imminent.

Turning to the day ahead, the main focus will be on the FOMC minutes which may provide more detail on policy options following the end of Operation Twist next month. We may also get more detail on Yellen’s inflation/employment targeting plans. In terms of data, US  retail sales and the BoE’s inflation report are the main economic releases. Reuters is reporting that Spanish, Portuguese, Greek and Italian unions have planned a coordinated “European Day of Action and Solidarity”, with strikes against austerity policies. Obama’s press conference is scheduled for 1:30pm US EST today, after which the president will meet with a number of business leaders to discuss his budget proposals.

http://www.zerohedge.com/print/459454