Similar to yesterday, today is quiet with lots of clouds but also some beams of sunshine. I’ll start with the clouds.

Unemployment is a tough story both domestically—“U. S. Faces Battle to Retrain the Jobless” on page A1 of the Wall Street Journal (WSJ)—and internationally—“Joblessness Hits New Highs in Euro Bloc” on page A9 of the WSJ, “Pressure on ECB as unemployment in eurozone hits high” on page 4 of the Financial Times (FT), and “Joblessness in Euro Zone Reaches Record High” on page B8 of the New York Times (NYT). The headlines are pretty self-explanatory, and this is clearly a meta-story with legs in both Europe and the U.S. Note that, although the headlines emphasize solving the problem in the U.S., they merely note that the problem continues to worsen in Europe.

The papers are rather quiet again this morning, which is a good thing. Looking through, I see considerable coverage of ongoing problems: the Financial Times (FT) has “HSBC sets aside $2 billion to cover fines” on page 1, and the Wall Street Journal (WSJ) has “States’ Hidden Jobless Woes” on page A4, “Crisis Saps Euro-Zone Confidence” on page A8, and “A War Footing in the South China Sea” on page A13.

There are also more encouraging articles, though, which have been unusual to find for the past couple of years. I made a point this morning on the CIO panel at the Financial Advisor conference that Europe has adapted to the crisis and is developing tools to make this a more chronic affliction than an acute one—arthritis as opposed to heart attacks. The U.S. has done the same thing, and as the crisis normalizes around the world, we are starting to see signs of healing.

I do not normally read, much less review, books that self-characterize as prophecy. Most such books, especially those written more than 10 years ago, are kindly described as being of historical interest only. To find one that actually got quite a number of things right—both in specific types of events and time frame—is therefore pretty interesting.

It gets even more interesting when the book’s next set of predictions is not only scary, but also in line with its earlier forecasts that proved largely correct.

I am at the Financial Advisor magazine Innovative Alternative Strategies symposium today and tomorrow, where I will be sitting on the Chief Investment Officer panel. I will therefore be spending most of the day in sessions that I will talk about in later posts. That, combined with a relatively slow weekend in the news, makes this post a bit shorter than usual.

Two lead financial and economic stories yesterday. First, the markets melted up on the announcement by Mario Draghi, head of the European Central Bank, that policy makers would do whatever was necessary to save the euro. The news hit the front page of the Financial Times (FT) with “Draghi triggers rally with bonds talk,” the front page of the Wall Street Journal (WSJ) with “A Pledge to Save the Euro,” and the front page of the New York Times (NYT) business section with “Stocks Soar After Pledge to Support the Euro Zone.” All good, except that we have seen this movie before:

Scene 1: European official pledges support, assures markets that everything is under control.
Scene 2: Markets react positively.
Scene 3: Everyone thinks about it some more.
Scene 4: Markets drop.

This will be a brief update because I am on the last leg of the Commonwealth Live! road show. I was delayed in posting earlier this week because of travel, and I figure it is probably better to get a briefer posting up in real time rather than a longer one the next day. Let me know if you agree or disagree.

Watch An Economic Update

Nothing particularly new this morning. The meta-story about the Federal Reserve (Fed) getting closer to more stimulus shows up on page A1 of the New York Times (NYT) with “Fed Leaning Closer to New Stimulus if No Growth is Seen” and on page A1 of the Wall Street Journal (WSJ) with “Fed Moves Closer to Action.” The articles seem to deal mostly with what the Fed could do, in a tone that suggests that this is all speculation. Interesting that it shows up in both papers in similar ways. This is probably a leading indicator of future policy, but it’s not hard news as yet.

Europe continues to simmer, although the Europeans themselves don’t seem to be all that worried. The Financial Times (FT) has two articles, “Brussels patient despite Spain’s pressures” and “ECB stands firm on Spain’s pleas,” that talk about how European officials are not planning further action at this point—and are even going on summer vacation. This insouciance would be reassuring, maybe, if it weren’t contradicted by other articles from the FT like “Rome places spending controls on Sicily” and “German private sector woes mount” and by articles from the WSJ such as “Downturn Deepens in Euro-Zone Economy” and “European Crisis Seen Spreading to Russia,” both from page A8. The Europeans still don’t seem to get it, which is mind-boggling.

Two big themes in the papers today—Europe’s continuing weakness and China’s growing assertiveness in the world.

Europe first. Spain is the big news, with yields rising even higher into unsustainable territory, driven by the regions, as I discussed yesterday. The Financial Times (FT) leads on page 1 with “Spain costs stoke bailout fears” and follows on page 4 with “Madrid in duel with regions for aid.” Spain will end up in a bailout, probably pretty shortly, and, as the fourth largest economy in Europe, this is going to strain the system—maybe to the breaking point.

There were no significant single financial events over the weekend, but there was continued fallout. The Financial Times (FT) led with “Deteriorating outlook drives Spain’s borrowing costs near euro-era highs.” Despite the bailout, bond yields are well above 7 percent—an unsustainable level—and appear likely to stay that way, according to the story on page B16 in the Wall Street Journal (WSJ), “Bailing on Spain’s Bailout.” Greece is also back in the news, on page 3 of the FT with “ECB raises pressure on Athens over debt collateral” and on page A8 of the WSJ with “ECB Adds to Pressure on Greece.” The European story is not over yet, and it may erupt back into the headlines in short order.

The U.S. picture in the press is a bit more mixed. The WSJ ran “Unemployment Rises in Six of 10 Battleground States” on page A3 on Saturday and “Price Check: Drought May Hit Grocery Tab” on page B1, but on Monday, page B1 had “As Homes Go, So Do Pickups,” which pointed out a recovery in truck sales and home sales. The weight of the coverage is still negative—note “Bleak jobs outlook raises heat on the Fed” on page 1 of Monday’s FT—but some nuance is creeping into coverage of the U.S. Maybe it is a leading indicator.