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Eurozone May industrial production +12.4% vs +15.0% m/m expected

  
  Analysis
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Latest data released by Eurostat – 14 July 2020

  • Prior -17.1%; revised to -18.2%
  • Industrial production WDA -20.9% vs -18.9% y/y expected
  • Prior -28.0%; revised to -28.7%

Factory output rebounded in May but not as robust as anticipated, with the annual reading highlighting the plight faced by the euro area economy despite the gradual easing of lockdown measures. June should also reflect a rebound but new normal conditions and the pace of the recovery will likely only be seen in July to August or later in Q3.

Eurozone April industrial production -17.1% vs -18.5% m/m expected

  
  Analysis
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Latest data released by Eurostat – 12 June 2020

  • Prior -11.3%; revised to -11.9%
  • Industrial production WDA -28.0% vs -28.8% y/y expected
  • Prior -12.9%; revised to -13.5%
Those are some horrific numbers but again, it isn’t surprising at this stage since we know that April is the worst month in terms of economic activity due to the widespread lockdown measures in the region and the peak fallout from the virus outbreak.
This all just serves to reaffirm that Q2 economic conditions are set to be the worst in history for the euro area – much like most parts of the world.

Eurozone August unemployment rate 7.4% vs 7.5% prior

  
  Analysis
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latest data released by Eurostat

unemployment eurozone
The latest unemployment figures from the eurozone are showing a continued steady decline in unemployment numbers. The worry here would have been if employment levels start to fall due to a slowdown in manufacturing etc. However, no concerns like that seen in the data and EURUSD at 1.0932 – remember there are some decent option levels at 1.0900 level on the EURUSD

Eurozone July construction output -0.7% vs 0.0% m/m prior

  
Analysis, Economy
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Latest data released by Eurostat – 18 September 2019

  • Prior 0.0%; revised to +0.6%
  • Construction output +1.1% y/y
  • Prior +1.0%; revised to +1.6%
The positive revisions sort of take away some of the negative impact from the headline monthly figure but nonetheless, it still underscores some weakness and sluggishness in construction activity in the region too start Q3.
A minor data point but feeds into the overall softness of economic activity in the euro area as we navigate through the second-half of the year.

Tim Backshall On Europe: "Default Now Or Default Later" As EuroStat Complains That Greece Is Still Withholding Critical Data

  
Analysis, Economy, Education
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There is one major problem with putting houses of card back together – they tend to fall…over and over. And while abundant liquidity in May and June served as an artificial prop to return European core and PIIGS spreads to previous levels merely as mean reversion algos took holds, the second time around won’t be as lucky. CDR’s Tim Backshall was on the Strategy Session today, discussing the key trends in sovereign products over the past few months, noting the declining liquidity in both sovereign cash and derivative exposure (we will refresh on the DTCC sovereign data later after its weekly Tuesday update). Yet the most interesting observation by Backshall is the declining halflife of risk-on episodes, which much like the SNB’s (now declining) interventions, are having less of an impact on the market, as ever worsening fundamentals can only be swept under the carpet for so long before they really start stinking up the place, and indeed, as Tim points out at 5:30 into the interview, even the IMF now realizes that soon the eventual second domino will fall, and it is better the be prepared (via the previously discussed infinitely expanded credit line), than to have to scramble in the last minute as was necessary in May. In other words, the storm clouds are gathering and only fools will invest in risk asset without getting some additional clarity on what is happening in Europe. The bottom line as Backshall asks is: “do they default now or default later.” And that pretty much sums it up. Buy stocks at your own peril.

Incidentally all this is happening as we read in an exclusive Bloomberg piece that “four months after the 110 billion- euro ($140 billion) bailout for Greece, the nation still hasn’t disclosed the full details of secret financial transactions it used to conceal debt” and that EuroStat still has not received the required disclosure about just how fake (or real) the Greek debt situation truly is. When one steps back and ponders just how bad (and unknown) the situation in Europe is, and that stocks are unchanged for the year, one must conclude, as Dylan Grice does every week, that the lunatics have truly taken over the asylum.

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