This IMF report precedes a meeting of all 188 members in Tokyo later this week, so there will certainly be more reports from this group.

In Luxembourg today (Tuesday), there was a meeting European of foreign ministers, where they were trying to make the rules for a single bank examiner system in the euro zone. Little progress is expected in this project, but a combination of French and German support for a tax on stocks, bonds, and financial derivatives is making progress. Strong opposition does exist from the UK, Sweden and the Netherlands., but as many as nine countries may proceed without the dissenters.

Opponents of the financial transaction tax fear this will be a severe impediment to capital formation and trade. There are also fears this would also tax the forex trade, where the margins are extremely slim.

The largest meeting today is in Athens where German Chancellor Merkel has a meeting with Greek PM Samaras. There, about 6,000 police officers are confronting the largest group of rioters assembled in months. The unemployed, 25% of the working population, do have lots of idle time.

The timing of Merkel's visit is curious. Currently the "troika" has been talking to the Greeks, trying to determine if they have complied with the austerity plans. The next tranche of the €130B bail out, 31.5B, is due by November, or Greece may become insolvent. Perhaps her trip is to prop up the perceived solidarity with the Greek's and their membership in the euro, but the mob in Athens is not getting the message, nor does it seem to be helping the euro.

Tomorrow is another busy day of meeting for the leaders of Italy, Spain and France.  Equities and risk markets are unnerved with today's events. The pound and the euro have also felt the pressure.

Since August we have been perplexed about the strength of the pound. Versus the USD, the pound appreciated from 1.55 to 1.63, and the open interest in the futures went up to where it is bigger than the always popular Aussie. In the latest COT report, we noted the long spec position in the pound futures exceeded 55K contracts. Since much of the build in the OI had occurred in the 1.61/1.63 area, we guessed there might be some selling under 1.60.

Today we have taken out the 1.60 area and some initial stops. Part of the attraction for the pound is, it is not the euro. Money from Europe, as well as Russia and the Middle East has been moving to London. With Hollande's new 75% tax on the big earners, there may be some movement from France to London also.

The UK also grants big investors the right to live in Britain. For the past twenty years if you invested £1M in gilts or British stocks you can move there. For the period ending in June of this year over 400 investors took advantage of this feature. This capital inflow probably serves to partially offset Britain's negative trade balances.

On balance, however, we prefer to be a seller of the pound. The British austerity plan of higher taxes and lower expenditures is negative for growth. If we get a rebound back in the 1.6050/.6100 (UUP, FXB, GBPUSD) area we want to try the short side of the pound. As always manage your risk.