The economic numbers cannot be dressed up as anything but horrendous. European PMIs in the mid forties speak of rapidly decelerating economies. There is both an upside and downside to these numbers. The downside is that if the Europeans do not deal with the issues facing them the economy will get worse. Finger pointing and talking is not working. Its time for action.
The upside is that an event like this might be just what is needed to get Europe into action. The only time the ECB or EU have acted has been when the crisis spun out of control and its currently spinning. The second benefit is that of sentiment. I spoke yesterday of how some sentiment indicators were refusing to fall into place. This is precisely the type of even that is likely to get the remaining sentiment indicators into extreme territory.
I expect that the current action will eventually lead to a rally. I suspect that the fate of this rally will ultimately depend on how well the Europeans deal with their issues.