Data to be the driver
It always comes back to economic data.
The market flirts with themes and ideas about what's happening in the global economy but, eventually, the results come in.
Theme: The US economy faces the chance of recession
Data: Manufacturing is softening and that may weigh on trade. The consumer hasn't show any particular strength despite lower oil prices.
Theme: China is stumbling
Data: China is definitely slowing but there has been nothing in the past two months to inidicate any kind of acceleration of problems
Theme: Developed-market commodity exporters are in trouble
Data: The numbers have been surprisingly strong but there have been significant signs of cracks in the latest Canadian jobs and retail sales reports.
Theme: The Eurozone is recovering
Data: Today's Eurozone PMIs were largely softer than expected. There is no room for error in Europe and governments aren't doing the economy any favors.
Some of these themes have been extremely built up over the past 3 months. Now is the time to find out where the market was right and where it overreacted. In the meantime, traders are getting worried and backing out of the most crowded trades.
