The biggest question is about how the data in the week may change reaction functions of the Fed, ECB and BOE and whether the risk of growth is best understood by the mood or the actual forward-looking data, writes Bob Savage Tuesday.

The chart to consider is using the Chicago National U.S. activity index and it’s telling us that there is a 1 in 4 chance for a recession.

Driving requires a good road and a good operator. Trading requires a good market and balanced risk-takers.

There is an interesting divergence in moods for business and consumers around the world. The compare and contrast clearly helps to explain why the U.S. dollar (USD), U.S. rates and U.S. stock market has a different momentum and trajectory for now, but for how long.

The better moods in the U.S. reflect the better economy and better profits, however, we all know that markets trade on future expectations not present ones. The balancing act is when the rest of the world matters.

Overnight there was little economic data in Asia other than Australia business confidence – with the mood there at 2-year lows – lower because of trade and politics at home.

The data in Europe was less with French employment lower in 2Q, UK jobs also showed a bit of wobble with claimant count higher and wages higher – labor costs going up mean BOE will be on watch later this week.

But the balancing act against this was the German ZEW where moods are improving as well.

So here is the see-saw going into the U.S. open:

• Less fear – NAFTA talks resume, EU talks with U.S. on trade progress, Republicans push for more tax cuts, North Korea Kim and Trump set up plans for another meeting, EU Barnier says its realistic for a Brexit deal in 6-8 weeks.

• More fear – The NYT reports China faces sanctions from U.S. over Uighur re-educations camps, WSJ highlights focus on Indonesia as next domino risk in EM. Hurricane Florence is going to disrupt the East Coast – worst storm to hit mid-Atlantic since 1989. China takes U.S. to WTO.

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