“Don’t rock the boat, don’t tip the boat over.” The above video from the Hues Corporation should be the official song for the E.U. Summit which begins today in Brussels. Everything is just so damn good. The EUR is at highs against the USD. Peace and love prevail. “So I would like to know where you got the notion?”

As Europe gets ready to congratulate itself again for Best Outstanding Performance, Digital Markets Advisor would like to say please count us out. While Spanish bond yields continue to mysteriously do well in actual terms, reports are highlighting that Spanish banks face a worst case scenario as growth recedes deeply into depressionary modes for the nation. And speaking about nation, it must be pointed out that a not too small entity called Catalonia is beginning to push seriously for independence.

And it is not only Spain that faces troubles as many know. Greece will certainly be discussed at the E.U. Summit these next two days and no matter what the European leaders do they will not be able to put Humpty Dumpty together again.

So traders are left looking at an abyss and they should be prepared to take advantage of it. While Europe makes believe all is well, the United States is certainly trying its best to imitate this ‘confidence game’ in many respects – led by the White House. However thorns continue to stick collectively in the side of the smiling politicians and their names are Quarterly Reports. IBM, Intel, Nestle among others have shown that economic conditions have been lackluster and that outlook remains less than optimistic. While the GDP from China earlier today met expectations and the word of ‘stability’  was echoed by many for the great capitalistic hope, the communist government’s economic outlook does not rest on domestic demand but mainly from places like Europe and the States. “Don’t rock the boat baby.”

Retail Sales data will be coming shortly from the U.K., the Spanish are set to sell 10-Y Bonds (dive in now at your own peril), and the States will bring forth the weekly Unemployment Claims and the Philly Fed Manufacturing Index reading. The Philly report could prove to be important, but the question begs about who is watching when it appears that investors have somehow continued to fall under the spell of a ‘great mentalist’ who aspires for serene and confident sailing as tropical storm warnings continue to be minimized.

While the EUR remains near its highs these values must be questioned in our opinion.