(that's what I've been saying for a long while now)

"The Fed is in panic mode. The massive credibility chasms down which the Fed and maybe even the ECB will plummet when they fail to hike rates in the face of higher inflation will combine to give us a big sell-off in risky assets," he said.

Kit Jukes, RBS's head of debt markets, said Europe would not be immune. "Economic weakness is spreading and the latest data on consumer demand and confidence are dire. The ECB is hell-bent on raising rates.

Ultimately, the bank expects the oil price spike to subside as the more powerful force of debt deflation takes hold next year. (I have to agree with that one as well)

What does Morgan Stanley think? Not such great things either. Would someone please pass long some of this data to the pundits clapping like seals to "buy stocks, they're cheap and everything is fine!"

• The clash between the European Central Bank and the US Federal Reserve over monetary strategy is causing serious strains in the global financial system and could lead to a replay of Europe's exchange rate crisis in the 1990s, a team of bankers has warned.
• "We see striking similarities between the transatlantic tensions that built up in the early 1990s and those that are accumulating again today. The outcome of the 1992 deadlock was a major currency crisis and a recession in Europe," said a report by Morgan Stanley's European experts.
• Just as then, Washington has slashed rates to bail out the banks and prevent an economic hard-landing, (that's how we solve everything, print more wortheless US pesos and make sure the fat cats get bailed out from their stupidity - then we wonder why the fat cats do the same stupidity every 6-8 years) while Frankfurt has stuck to its hawkish line - ignoring angry protests from politicians and squeals of pain from Europe's export industry.
• The point of maximum stress could occur in coming months if the ECB carries out the threat this month by Jean-Claude Trichet to raise rates. It will be worse yet - for Europe - if the Fed backs away from expected tightening. "This could trigger another 'catastrophic' event," warned Morgan Stanley.

The news is really not every different than it has been for months... most of the past year really. But the market is ever hopeful - always trying to pounce on every sliver of data to reassure themselves that it is time to buy. Instead of taking 10 steps back and looking at a quite dark big picture. Because that would require actual thinking and analytical ability. Instead of just being hand fed data from the government about how everything is just fine, thank you. The Plunge Protection Team could be in store for a very busy summer and fall....

Conclusion: This is all priced in and setting up beautifully for that 2nd half recovery to start in 2 weeks. Drink Kool Aid, and buy stocks. Everything will be fine soon.