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A fact in itself is nothing. It is valuable only for the idea attached to it, or for the proof which it furnishes.
                                    – Claude Bernard

China factories in 8th month of contraction-PMI (Reuters)
Spain borrowing costs soar as EU ponders bank aid (Reuters)
Germany infected by eurozone woe (Financial Times)


Without a doubt, risk appetite was hit across the board today. The combination of 1) an empty gesture from the Federal Reserve yesterday afternoon, 2) further turmoil in the eurozone crisis management, and 3) further weak manufacturing numbers in across the globe have helped to renew fears that global recession and asset deflation is around the corner.


Technically, the sour news corresponds with a corrective rally that may have hit resistance that won’t again be tested for a while. While the S&P 500 (below) is certainly vulnerable, markets in Europe and Asia are especially vulnerable in the current environment – shorting (or buying put options) on select ETFs like FXI (iShares China), EWI (iShares Italy), or EEM (iShares Emerging Markets) may make sense now. Below is a chart of the S&P 500 we originally put together on June 7 to get an idea of how long risk appetite might drive markets higher; are we done?