While China (FXI, quote) continues to disappoint and send a message to the global economy, Europe continues to show resilience and makes one wonder whether a sustained recovery isn’t in fact in place. 

Image courtesy Vasenka: http://www.everystockphoto.com/photographer.php?photographer_id=69281This morning the Markit Composite Eurozone PMI came in right in line at 53.2 vs 53.3 last month or basically at 3yr highs.     

Both Services and Manufacturing were near their recent highs despite the strength of the Euro which has been a freight train higher in 2014 (+6.8% vs USD).                                 

We think Europe will feel the weight of the Euro (FXE, quote) both on the export front and relative to where overall disinflationary pressures.  Continue to monitor European Central Bank (ECB) developments as it pertains to more 1% inflation.

The ECB does not have the Fed's dual mandate.  It’s also important to note the role reversal in the performance of the underlying countries in tech PMI report.  France outperformed and Germany disappointed.  Is this a China factor at work?  Germany is the largest exporting nation in Europe and a proxy for overall emerging market import demand.

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