Have you see the European stock indexes lately? Or those Italian and Spanish government bond yields dropping to levels not seen since the fall of 2010?

Here's a chart of the EuroStoxx 600...

And I'll spare you a boring chart of the bond yields; suffice to say that the Italian 10-year fell below 4% and Spain's is hovering just above there.

Could these barometers of risk appetite be signaling that the worst is over for Europe? Or is this just a global liquidity event, especially after Japanese investors have been loosed upon the world to buy every other financial asset they can?

When you look at the following graph of Eurozone composite PMI and GDP, it's hard to get excited about an economic recovery any time soon.

And the bond market picture makes sense -- especially if the continent is staring down into the spiral of deflation.

The ECB finally capitulated last week and lowered short-term rates again in an effort to stem the slow-down. But it may be far too little, too late. What strong central bank action has accomplished in Europe with the ESM and OMT is that it helped stabilize the banks and provide the ultimate currency --confidence.

But getting the economy to turn around while austerity is all the rage could be a completely different challenge. Here's what Chris Williamson, Chief Economist at Markit had to say in late April after the PMI data was released...

"Although the PMI was unchanged in April, the survey is signaling a worrying weakness in the economy at the start of the second quarter, with signs that the downturn is more likely to intensify further in coming months rather than ease.

The renewed decline in Germany will also raise fears that the region's largest growth engine has moved into reverse, thereby acting as a drag on the region at the same time as particularly steep downturns persist in France, Italy and Spain.

Policymakers will at least be relieved to see inflationary pressures cooling, which could further open the door to renewed policy stimulus."

The question is, will the ECB "evolve" their single mandate for price stability and embark on a full QE monetary stimulus plan to save their economy? And will they do it soon enough?

Also, why do you think European stocks have been so attractive to investors lately?