Tag: economic recovery

Three PMI Surprises, but France Takes the Show

Three PMI Surprises, but France Takes the Show

By Marc Chandler There have been three flash PMI reports today, and each was surprising. China and Germany surprised on the downside while the French surprise was on the upside. HSBC’s flash read on China’s manufacturing sector weakened for the fifth consecutive month. The flash March reading of 48.1 compares with the final February of 48.5. The forward looking new […]

On the recovery in Europe’s periphery and loss socialization

On the recovery in Europe’s periphery and loss socialization

It’s not fashionable to be optimistic about Europe. But I have been a Europe bull since last April when we moved from the front-loaded austerity paradigm to a backloaded paradigm. And beginning in June 2013, I saw the data moving in that direction. Now the data now fully support this stance. But that’s the cyclical view. What about the macro secular story? Here the story is a bit more murky as it involves loss socialization, the continuing bank – sovereign nexus, and huge government debt burdens without the central bank backstop of a sovereign currency issuer.

Economic data show Europe on upswing and US growth down

Economic data show Europe on upswing and US growth down

Since October I have been saying that the US growth was probably going to decline for the remainder of this business cycle. In contrast, I have believed Europe would recover ever since data last June confirmed a broad based phase shift across the entire eurozone from worsening data to better data. The most recent data confirm this pattern becoming well entrenched. Some thoughts below

Europe is in a recovery as Spain demonstrates uptrend

Europe is in a recovery as Spain demonstrates uptrend

When the Eurozone moved toward the backloaded austerity paradigm, last Spring, I started to change my tune on Europe. In June, I wrote that we should watch second derivatives in the Eurozone, because the change in change numbers are a harbinger of a phase shift between recession and recovery. As with the US recovery in 2009, I have been cautious about calling this a recovery because we are still at stall speed. However, recent upbeat eurozone data signal the recovery in Europe is for real.

The fragile recovery and the rise in asset prices

The fragile recovery and the rise in asset prices

Now that Europe is on the mend, the initial phase of the financial crisis is clearly in the rearview mirror. Equity prices, bonds prices and house prices have risen by leaps and bounds even before this economic recovery was clear. Yet, the recovery itself is tentative, making plain the vast gulf between asset markets and the real economy.

More thoughts on the global recovery

More thoughts on the global recovery

My view since the beginning of the financial crisis has been that policy levers to alleviate this private debt stress are limited, and that this limitation will be felt in defaults, writedowns and deleveraging of a magnitude that is larger than usual for a cyclical downturn. Hence, the name of this blog. This view has been validated by events but now we are in a recovery. And so the question is why that view necessarily holds now that the crisis has past.

Austerity is still the prevailing paradigm right across Europe

Austerity is still the prevailing paradigm right across Europe

Despite Europe’s continual moving of the goalposts to give countries more breathing room, the economic paradigm in Europe is still the same: austerity. This will dampen growth in Europe for the foreseeable future and increase government debt to GDP ratios, making debt deflation and crisis a background threat which will result in sovereign restructurings regardless of recovery.