Portugal Just Threw Another Dagger At Europe - And People Think We're Seeing Global Growth Crumble All Over Again

Associated Press

WELCOME BACK.

We hope you had an excellent weekend.

If you want to feel gloomy as things get going again, check out the latest from SocGen's Kit Juckes, who talks about the Portuguese Supreme Court rejections of austerity measures, and the fear that global growth is crumbling again.

The weekend talk is all Euro and of course, all bearish. The CFTC data on Friday night confirmed that the market got itself good and short euro and good and long dollars and that set the scene for the bounce. But Draghi DID hint at lower rates. And then Portugal's constitutional court threw a fast ball at the Portuguese government. Apparently, cutting pay and benefits for the public sector is unfair on the rest so they need to try again. The result is that there's a hole in the austerity plan and everyone else (ie Spain) is looking to see what happens. Europe has no growth plan, and austerity into recessions is unpopular. And perhaps unconstitutional.

Meanwhile, Jens Weidmann is spelling out the same uncomfortable and austere message about winding up banks and the public sector not always being there to bail everyone out, as Dijsselbloem. The bottom line of all this is always the same - don't count on growth. Gavyn Davies meanwhile has a piece in the FT wondering whether we are, yet again, seeing a winter bounce in global growth crumble in the face of spring. And he thinks Germany is critical. Oops, German data are softening too. ECB will ease further, Europe still lacks a growth plan,it would still be better if the ECB actively pushed the euro down, but that takes a huge mind-set shift. Europe is still trying to be Japanese and even after Friday's nonsense, have you seen how low long-dated JGB yields are in Japan?

So yes, on the plate are: The craziness in Japan, collapsing Euro growth, and now this pesky constitutional court in Portugal saying that some austerity measures are not allowed.

Meanwhile, we'll find out Friday if things are really deteriorating again in the US.