Stagflation, the worst possible outcome for one’s economy, has been acknowledged by the BoE’s Mervyn King for the UK as he said today, “The recent pattern of revisions to the projections over the next yr, downward to growth and upward to inflation, has continued.”  He believes that “if utility prices rise further later in the year, inflation will reach 5%.”  This, as the BoE has their benchmark rate at .5%.  This points to the problem with other central banks (ours) that the further you ease policy, the more difficult it is to get out and with the recent moderation in US economic growth, I’m afraid stagflation here is beginning to peek its head.  Germany’s final Apr CPI rose 2.7% y/o/y, the most since Sept ’08 and .1% higher than expected.  Chinese Apr CPI rose 5.3% y/o/y, also .1% above estimates.  PPI was a touch below forecasts but still rose 6.8%.  Chinese bank loans totaled 40b yuan higher than expected but IP and Retail Sales were a touch light.  Net, net with China, the Shanghai index responded with a .3% drop.  In the US, spurred on by a 5 month low in mortgage rates, the MBA said refi’s rose 9% and purchases were up 6.7%.  II: Bulls 51.1 v 54.9 Bears 16.5 v 18.5