3 Numbers To Watch: EU Ind. Pro., DE ZEW, US NFIB Small Bus.

Updates on inflation for several key economies in Europe kick off the economic news today, including Germany's consumer price index (06:00 GMT), followed by the simultaneous releases of the Eurozone industrial production and ZEW Indicator of Economic Sentiment for Germany. Later, the NFIB Small Business Optimism Index for the US is scheduled for publication.

EU Industrial Production (09:00 GMT) Last week’s final read on the Eurozone Composite PMI report for April tells us that the end of the recession is still nowhere in sight. “The PMI suggests that, having eased in the first quarter of the year, the Eurozone’s economic downturn is likely to have gathered momentum again in the second quarter,” says Markit’s chief economist in the accompanying press release. That is a signal for expecting that today’s update on industrial production for Europe is not likely to alter the big picture outlook.

But the details still matter. The end of recession may be conspicuously missing at this point, but something approximating a period of stability will likely precede the turning point. To keep hope alive that we are approaching that milestone, sentiment can tolerate nothing worse than flat performance for today's March industrial production data. In fact, some economists think we will see a modest gain, which would mark two straight months of growth for industrial output. That is hardly a game changer, assuming the prediction holds. On the other hand, two months of consecutive expansion is a rare event in recent history for this series. Analysts will debate the implications of another positive number, of course, but you do not need a Ph.D. in economics to understand what another round of red ink suggests.

Germany ZEW Indicator of Economic Sentiment (09:00 GMT) The market will be closely watching this release in the wake of last week’s news that business activity overall declined last month for the first time since last November. It is still unclear if the April dip below the neutral 50 mark for the Germany Composite PMI is a short bout of wobbly behavior or something more ominous for Europe’s leading economy. Today’s ZEW report may enlighten us.

In the April release, the ZEW Indicator of Economic Sentiment for Germany - a measure of the financial community's expectations - declined for the first time in five months. But the drop was slight, leaving open the possibility that it is just noise. If so, we will see little if any deterioration in today’s update, which is what analysts are expecting. But considering the latest Composite PMI number for Germany, the market is unlikely to be in a forgiving mood in the face of more disappointing news. The outlook from the financial trenches, however, is upbeat. Germany's DAX Stock Index has popped since the last ZEW report, rising more than 10 percent off the mid-April level, which marked the year’s low. For the moment, the crowd's expectations are reviving once again.

US NFIB Small Business Optimism Index (11:30 GMT) The small business sector just cannot catch a break, or so we are told. The broad economy continues to grow at a modest pace, but the state of macro looks quite a bit worse from the perspective of small businesses, as the folks from the National Federation of Independent Business are more than eager to point out.

“After another false start, small business confidence has sputtered and stalled again,” NFIB chief economist noted in last month’s update of the group’s index. The consensus forecast sees a slightly better performance for today’s April estimate, but at best that will signal that this slice of the US business sector continues to struggle with a weak recovery. If the economic outlook for smaller firms still faces headwinds, you would not know it by looking at equity prices for small-cap firms this year. The Russell 2000 (a widely watched proxy for small stocks) is up by roughly 3 percent year to date through May 10 - a modest premium over the large-cap Russell 1000's performance. Conditions are still tough for small firms, but demand for small-cap stocks remains strong. Is the divergence a sign that the small cap rally is over-extended? Or is the NFIB index poised to play catch-up with market sentiment? Today’s update may offer a clue.