The stock markets of the 2 most economically influential countries in the emerging world, China and India, have modestly broken out. The Shanghai index closed higher by .8% to a 3 month high and the Indian Sensex index traded higher by 1.1%, closing at the highest since Feb ’08. Copper in response is at a 2 week high. European stocks are higher after the Bundesbank raised its ’10 GDP estimate to 3% from 1.9% after the strong Q2 report. July retail sales in the UK were above forecasts. Combining these 2 items with a higher than expected July PPI # in Germany has European bonds modestly lower and Treasuries are following. With 20 yrs of malaise, a Japanese newspaper is saying the BoJ may expand further a credit program and they are still evaluating the economic impact of a stronger yen. From Jan ’03 to Mar ’04, the BoJ spent 35T yen (about $320B) intervening and it failed miserably and the experience will influence what the BoJ may or may not do.