For several weeks now we have advised clients to look for just a tad more than expected, the UK; we have advised clients to look for considerably less than expected from the E-Z.
UK: We’re not very happy with results, this credit. Last week Q4 GDP came at -0.3, 0.1 lower than expectations; one would have thought the end was near from the mkt reaction. Q4 is long gone. But Feb Retail Sales were worse than expected, -0.8. That surprised us and did not fit our anchor. We expected more from the consumer, a definite error in judgment on our part.
The recent CBI Trade print, at 0.0 was nothing to rave about but - 6.0 was expected! Here is an example of group decision making. Economists – shouting out, holding hands together in the dark. Today’s Feb Manuf PMI was far through expectations, at 52.1, and the fastest manuf pace in ten months.
And now? The way to approach the UK release stream ahead, our view is to expect no vigor naturally, just a little more momentum than is priced in at this writing.
E-Z: We’re pleased with results for this region. From mid Q4 to present, we have advised clients to look for “surprising” weakness from the E-Z, even after a Greek “solution.” Key to understanding this region is to recall that it’s easy to lead a horse to water. Getting him to drink is something else again. Banks will sit on their hands. Until they rebuild capital, they will not make loans and it is nonsense to believe otherwise.
The ECB reported a decline in lending in Feb. This should have come as no surprise to anyone. So this factor, coupled with other well-known retardants, including crude, will see that this region enters a recession. Sure enough, today’s E-Z Feb Unemployment hit a 25 year high at 10.8%; today’s E-Z Feb Manuf PMI at 47.7 vs 49 Jan was not the best of news either.
Look for the US to continue to distance the E-Z; look for the UK to just begin to close the gap to the US and to begin to widen that gap to the E-Z.
UK: We’re not very happy with results, this credit. Last week Q4 GDP came at -0.3, 0.1 lower than expectations; one would have thought the end was near from the mkt reaction. Q4 is long gone. But Feb Retail Sales were worse than expected, -0.8. That surprised us and did not fit our anchor. We expected more from the consumer, a definite error in judgment on our part.
The recent CBI Trade print, at 0.0 was nothing to rave about but - 6.0 was expected! Here is an example of group decision making. Economists – shouting out, holding hands together in the dark. Today’s Feb Manuf PMI was far through expectations, at 52.1, and the fastest manuf pace in ten months.
And now? The way to approach the UK release stream ahead, our view is to expect no vigor naturally, just a little more momentum than is priced in at this writing.
E-Z: We’re pleased with results for this region. From mid Q4 to present, we have advised clients to look for “surprising” weakness from the E-Z, even after a Greek “solution.” Key to understanding this region is to recall that it’s easy to lead a horse to water. Getting him to drink is something else again. Banks will sit on their hands. Until they rebuild capital, they will not make loans and it is nonsense to believe otherwise.
The ECB reported a decline in lending in Feb. This should have come as no surprise to anyone. So this factor, coupled with other well-known retardants, including crude, will see that this region enters a recession. Sure enough, today’s E-Z Feb Unemployment hit a 25 year high at 10.8%; today’s E-Z Feb Manuf PMI at 47.7 vs 49 Jan was not the best of news either.
Look for the US to continue to distance the E-Z; look for the UK to just begin to close the gap to the US and to begin to widen that gap to the E-Z.
Robert Craven
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