Euro Area

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2. EUROPE CAN’T GET OUT OF ITS OWN WAY

The past ~week has presented investors with one the worst stretches we’ve seen from the perspective of economic releases throughout the entirety of our #EuropeSlowing theme, rendering our Real GDP tracker for the region to the slowest pace of growth since 4Q14.

Lowlights include, but are not limited to:

  1. Eurozone Sentix Investor Confidence Index (↓ -2.53pts to 8.84 in NOV; TRENDING lower).
  2. Eurozone Composite PMI (↓ -1pt to 53.1 in OCT; TRENDING lower).
  3. Eurozone Real Retail Sales (↓ -140bps to 0.8% YoY in SEP; TRENDING lower).
  4. French Industrial Production (↓ -260bps to -1.1% YoY in SEP; TRENDING lower).
  5. German Manufacturing Orders (↓ -40bps to 2.2% YoY in SEP; TRENDING lower).
  6. German Exports (↓ -50bps to 1.8% YoY in SEP; TRENDING lower).
  7. German Composite PMI (↓ -1.6pts to 53.4 in OCT; TRENDING lower).
  8. Italian Real Retail Sales (↓ -464bps to -2.54% YoY in SEP; TRENDING lower).
  9. Spanish Industrial Production (↓ -110bps to -0.1% YoY in SEP; TRENDING lower).

We probably sound like a broken record here, but we continue to believe global investors are unlikely to be rewarded for allocating assets to a [now-delayed] European economic recovery story here in Q4.

To that tune, our patience in not backing off the short side of Europe is being rewarded with the EuroStoxx 600 Index down another full percent today after making a lower-high last week.

The EUR is down -0.7% today and making fresh ~18-month lows vs. the USD, which is also confirming of our dour view on the Eurozone economy and the ECB’s likely path forward for monetary policy. Even Spain – which is narrowly tracking in #Quad1 after the OCT Composite PMI data (↑ +1.2pts to 53.7; TRENDING lower) and has arguably the best GIP Model outlook in the world – continues to make a series of lower-highs and lower-lows (IBEX).

 

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Euro Area Economic Watch ECB preview- courtesy of forward guidance



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