Tag Archive: Germany

FX Daily, September 06: Focus Shifts to North American Jobs Before Turning Back to Europe next Week

2019-09-06

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2019-09-06

Investors hope that the world took a step away from the abyss in recent days. Developments in Hong Kong, US-China talking, a political and economic crisis in Italy appears to have been averted, and a risk of a no-deal Brexit has lessened. Asia Pacific equities closed the week on a firm note and extended the rally the third week.

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FX Daily, August 29: Johnson Faces Legal Challenges and Conte may be Given an Extension

2019-08-29

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2019-08-29

The capital markets are calm today, though there does seem to be some optimism creeping back into the market. The Chinese yuan strengthened, snapping a ten-day slide and Italian bank shares index has risen by more than 1% for the fourth consecutive session.

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Japan: Fall Like Germany, Or Give Hope To The Rest of the World?

2019-08-29

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2019-08-29

Japan JGB, Jan 2014 - Jul 2019
After trading overnight in Asia, Japan’s government bond market is within a hair’s breadth of setting new record lows. The 10-year JGB is within a basis point and a fraction of one while the 5-year JGB has only 2 bps to reach. It otherwise seems at odds with the mainstream narrative at least where Japan’s economy is concerned.

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FX Daily, August 27: Realism Fights Back After Hope Dominated Yesterday

2019-08-27

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2019-08-27

Hope triumphed over realism yesterday, and realism is fighting back toward. Asia Pacific markets, however, traded on the echo from the recovery in North America on Monday. The MSCI Asia Pacific recouped part of yesterday's drop, led by Chinese markets. Hong Kong was the main exception.

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Germany’s Superstimulus; Or, The Familiar (Dollar) Disorder of Bumbling Failure

2019-08-24

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2019-08-24

European Economy, 2004-2019
The Economics textbook says that when faced with a downturn, the central bank turns to easing and the central government starts borrowing and spending. This combined “stimulus” approach will fill in the troughs without shaving off the peaks; at least according to neo-Keynesian doctrine. The point is to raise what these Economists call aggregate demand.

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FX Weekly Preview: A Vicious Cycle Grips Markets

2019-08-19

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2019-08-19

The capital markets are in their own doom loop. Poor data from Germany and China, coupled with the escalation of the US-China trade dispute and rising tensions in Hong Kong spur concerns about the risks of a global recession. Interest rates are driven lower, and curves flatten or go inverted, spurring more concern about the outlook. The problem is that it is not clear how this vicious cycle ends.

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Why You Should Care Germany More and More Looks Like 2009

2019-08-14

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2019-08-14

Germany ZEW Financial Market Survey, 2006-2019
What if Germany’s economy falls into recession? Unlike, say, Argentina, you can’t so easily dismiss German struggles as an exclusive product of German factors. One of the most orderly and efficient systems in Europe and all the world, when Germany begins to struggle it raises immediate questions about everywhere else.

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Germany Struggles On

2019-07-25

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2019-07-25

Germany ZEW Financial Market Survey, Jan 2006 - 2019
The popular image of the German industrial machine politics is one which has Germany’s massive factories efficiently churning out goods for trade with the South of Europe (Club Med). Because of the common currency, numerous disparities starting with productivity differences had left the South highly indebted to the North just as the Global Financial Crisis would strike.

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FX Daily, June 24: Slow Start to Important Week

2019-06-24

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2019-06-24

The Trump-Xi meeting at the G20 this coming weekend and heightened tensions in the Gulf, with the US set to impose new sanctions on Iran's crippled economy are keeping investors on edge. News the opposition won the re-do of the Istanbul mayoral election has lifted the Turkish lira.

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FX Daily, June 13: Financial Statecraft or Whack-a-Mole

2019-06-13

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2019-06-13

Overview: After roiling the markets by threatening escalating tariffs on Mexico, US President Trump has threatened China that if Xi does not meet him and return to the positions that the US claims it had previously, he will through on imposing tariffs to the remaining goods the US buys from China that have not already been penalized. 

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FX Daily, May 20: Politics Overshadows Economics Today, but Japan’s Economy Unexpectedly Expanded in Q1

2019-05-20

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2019-05-20

Encouraged by the election results, investors bid up Indian and Australian currencies and equities. Japan offered a pleasant surprise by reporting the world's third-largest economy expanded in Q1. Most other equity markets in Asia fell, and European stocks have the week with small losses.

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What’s Germany’s GDP Without Factories

2019-05-09

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2019-05-09

Europe Real GDP, 2007-2013
It was a startling statement for the time. Mario Draghi had only been on the job as President of the European Central Bank for a few months by then, taking over for the hapless Jean Claude-Trichet who was unceremoniously retired at the end of October 2011 amidst “unexpected” chaos and turmoil. It was Trichet who contributed much to the tumult, having idiotically raised rates (twice) during 2011 even as warning signs of crisis and economic weakness...

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External Demand, Global Means Global

2019-04-07

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2019-04-07

Germany Factory Orders, SA 2014-2019
The Reserve Bank of India (RBI) cut its benchmark money rate for the second straight meeting. Reducing its repo rate by 25 bps, down to 6%, the central bank once gripped by political turmoil has certainly shifted gears. Former Governor Urjit Patel was essentially removed (he resigned) in December after feuding with the federal government over his perceived hawkish stance.

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FX Weekly Preview: The Green Shoots of Spring

2019-04-01

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2019-04-01

Investors have worked themselves into a lather. Equities crashed in Q4 last year amid on corporate earnings and concerns about growth. The Fed’s tightening decision in December was made unanimously. The above-trend growth, the preferred inflation measure was near target, unemployment was the lowest in a generation and real rates were historically low.

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Slump, Downturn, Recession; All Add Up To Sideways

2019-03-22

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2019-03-22

Germany ZEW Financial Market Survey 2007-2019
According to Germany’s Zentrum für Europäische Wirtschaftsforschung, or ZEW, the slump in the country’s economy has now reached its fourteenth month. The institute’s sentiment index has improved in the last two, but only slightly. As of the latest calculation released today, it stands at -3.6.

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The World Economy’s Industrial Downswing

2019-03-20

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2019-03-20

Europe Industrial Production, 2013-2019
As economic data for 2019 comes in, the numbers continue to suggest more slowing especially in the goods economy. Perhaps what happened during that October-December window was a soft patch. Even if that was the case, we should still expect second and third order effects to follow along from it.

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Downturn Rising, German Industry

2019-03-12

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2019-03-12

US Treasury Yield Curve, Aug 2007 - Jan 2019
You know things have really changed when Economists start revising their statements more than the data. What’s going on in the global economy has quickly reached a critical stage. This represents a big shift in expectations, a really big one, especially in the mainstream where the words “strong” and “boom” couldn’t have been used any more than they were.

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That’s A Big Minus

2019-01-19

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2019-01-19

Europe Industrial Production 2013-2018
Goods require money to finance both their production as well as their movements. They need oil and energy for the same reasons. If oil and money markets were drastically awful for a few months before December, and then purely chaotic during December, Mario Draghi of all people should’ve been paying attention.

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Germany is Stagnating

2019-01-12

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2019-01-12

Germany Industrial Production and Manufacturing PMI, 2012 - 2018
Sagging industrial production and confidence figures point to weak Q4 GDP. German industrial production (including construction) fell by 1.9% month-on-month in November, extending the sector’s decline to five out the six last prints. Year on year, industrial production was down by 4.6%, the worst performance since November 2009.

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…And Get Bigger

2019-01-11

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2019-01-11

Germany Industrial Production, Jan 2007 - 2019
Just as there is gradation for positive numbers, there is color to negative ones, too. On the plus side, consistently small increments marked by the infrequent jump is never to be associated with a healthy economy let alone one that is booming. A truly booming economy is one in which the small positive numbers are rare. The recovery phase preceding the boom takes that to an extreme.

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