Welcome to July 23, where all hell is breaking loose in the Western economies. The Euro teeters just above the 120 support level, and the dollar is gaining strength just below 84. In Spain and Italy, governments have issued short selling bans, which limit the amount of pressure to balance stocks and usually leads to massive selloffs by investors.
But the end of July, and beginning of August forecasts are not created out of thin air, but appear to be built on the dire economic indicators which came during the month of June.
Chart courtesy of Bloomberg
Only 7 out of 23 economic indicators showed positive in June, and this is normally a month with much lower volume in the stock markets.
More than anything, the markets are screaming for recession and deflation. And Ben Bernanke is nearing the bottom of his bottle of Jack Daniels to stomach the actions the Fed will be forced to do.