No Growth In Europe

The initial jobless claims positively surprised declining  40.000 from the prior week and reaching 440.000. The consensus was at 467.000. It looks that combined with census hiring the positive cold continue.

The markets yesterday closed positively yesterday on news that E.U. will back up Greece. The statement was obviously a product of lack of consensus. Today Euro continued its downward path. Maybe a true market reaction.

A lot of economic data today. Consumer sentiment came out at 73.7 vs. 75 consensus and 74.4 prior reading.

Chart 1. University of Michigan/Reuters Consumer Sentiment

Source: University of Michigan/Reuters

Retail sales came out right at the consensus of 0.5% vs. December reading of -0.3%. If we take autos out the number was growth of 0.6%, also right at the consensus, the December reading was at -0.2%. Business inventories fell -0.2% vs. 0.2 consensus and 0.4% November reading.

All in all the data is continuing to come out at the consensus which implies really subdued growth or even stagnation. The stimulus measures will be wearing off in Q3 and if the economy doesn’t pick up on its own possibility of negative growth rates in H2 is quite high.

If we look at Europe alone (where governments stimulus measures were smallest) it is obvious that there’s no growth. Germany today reported a 0.7 growth. On the E.U. level the growth was 0.1%. Bloomberg story: Europe’s Recovery Almost Stalls as Germany Stagnates. One can imagine the growth rates in the U.S. and Asia if government stimulus measures would be  comparable to the E.U.

Talking on Asia, the China’s central bank (second time in a month) rose the reserve requirement for 0.5% to 16.5%. The markets are taking the news as negative. I am, contrary to markets, weighing the possibility that China actually manages to cool down the economic growth. They have a very convince full track record. What if they can escape the Japan style breakdown?

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This entry was posted on Friday, February 12th, 2010 at 1:44 pm and is filed under Markets. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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