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The Eurozone Economy Plunges Back Into a Severe Decline

Eurozone business activity fell sharply as countries introduced more aggressive measures to counter rising COVID infection rates.
Flash PMI Signals Steep Downturn in November

IHS Markit reports PMI Signals Steep Downturn in November Amid COVID Lockdowns.

Key Findings

  • Flash Eurozone PMI Composite Output Index at 45.1 (50.0 in October). 6-month low.
  • Flash Eurozone Services PMI Activity Index at 41.3 (46.9 in October). 6-month low.
  • Flash Eurozone Manufacturing PMI Output Indexat 55.5 (58.4 in October). 4-month low.
  • Flash Eurozone Manufacturing PMI  at 53.6 (54.8 in October). 3-month low.

The flash IHS Markit Eurozone Composite PMI® slumped from 50.0 in October to 45.1 in November, its lowest since May. With the exceptions of the declines seen in the first two quarters of this year, the average PMI reading of 47.6 in the fourth quarter so far is the lowest since the closing quarter of 2012 (during the region’s debt crisis) and indicative of a steep decline in GDP.

The deteriorating performance was broad-based, albeit with the service sector hardest hit from virus containment measures. While manufacturing output growth merely slowed in November to the lowest since the start of the sector’s recovery back in July, attributable to a marked slowing in order book growth, service sector output fell for a third month running, with the rate of decline accelerating sharply to the fastest since May.

A near-stalling of manufacturing output growth was exacerbated by an increasingly severe drop in services activity, pushing the flash composite PMI down from 47.2 to 42.4

Employment meanwhile fell across the eurozone as  a whole for a ninth consecutive month, with the rate of job losses holding steady on the post-pandemic low seen in October.

By country, employment rose in Germany for the first time since February, and France saw the lowest number of job losses since the pandemic struck. Job cuts deepened in the rest of the region as a whole, however, to the steepest since June.

…click on the above link to read the rest of the article…

Synchronized Global Growth is Ending: Shocks Come Next

Economic pleasant surprises are in the past, as is the buildup of the balance sheet. The future is deleveraging.

Alarm bells are ringing. No one cares. By now, everyone knows stock only go up.

For those in tune with other ideas, Financial Times writer Stephen King suggests the Global Economy is Due for a Downswing.

Jim Bianco at Bianco Research comments on synchronized growth in his report Concerted Economic Growth is in Jeopardy of Ending.

Summary

Less than 50% of the world’s economies are now producing economic data surprises. Realized economic data following suit in the months to come would remove the tailwind of ‘concerted economic growth’ for risk assets and central banks. Emerging markets may be first on the list to experience higher volatility.

Comment

We have all been discussing ‘concerted global economic growth’ since early 2017 as a tailwind to risk assets and central bank policies. The chart below shows the percentage of the world’s economies producing economic data surprises (orange line) and above-average data changes (blue line) since 2004.

Over 90% of economies were indeed posting realized data changes at above-average growth rates in mid-2017. However, reported data has slowed its ascent over the past month led by the Eurozone and Canada. The percentage of economies with upside surprises has fallen to 44%, which has been a leading indicator for actual data changes like payrolls, industrial production, and durable goods orders. Above-average data changes have also rolled over to 67%. A break below 50% would mean ‘concerted economic growth’ should no longer be proclaimed.

Economic Misses

The next chart offers the median returns by major asset classes after the percentage of economies growing above-average falls below 60%. The impact is not immediate, but higher volatility and drawdowns do ensue over the following months.

…click on the above link to read the rest of the article…

Russia Meddling “Act of War”, Michael Moore Trapped, CIA Admissions

Idiotic comments regarding “Russia’s act of war” against the US for meddling in the Us election has reached consensus.

IN THE WAKE of last week’s indictments alleging that 13 Russian nationals and entities created fake social media accounts and sponsored political events to sow political discord in the U.S., something of a consensus has arisen in the political and media class (with some notable exceptions) that these actions not only constitute an “act of war” against the U.S., but one so grave that it is tantamount to Pearl Harbor and 9/11. Indeed, that Russia’s alleged “meddling” is comparable to the two most devastating attacks in U.S. history has, overnight, become a virtual cliché.

The claim that Russian meddling in the election is “an act of war” comparable to these events isn’t brand new. Senators from both parties, such as Republican John McCain and Democrat Jeanne Shaheen, have long described Russian meddling in 2016 as an “act of war.” Hillary Clinton, while promoting her book last October, described Russia’s alleged hacking of the DNC and John Podesta’s email inbox as a “cyber 9/11.” And last February, the always war-hungry Tom Friedman of the New York Times said on “Morning Joe” that Russian hacking “was a 9/11-scale event. They attacked the core of our democracy. That was a Pearl Harbor-scale event.”

But the last few days have ushered in an explosion of this rhetoric from politicians and journalists alike. On Friday night’s Chris Hayes show on MSNBC, two separate guests — Democratic Rep. Jerry Nadler and longtime Clinton aide Philippe Reines — posited Pearl Harbor as the “equivalent” of Russian meddling.

Should We Bomb Russia?

…click on the above link to read the rest of the article…

Shhhh! It’s TOP Secret: Fake News For Your Eyes Only

Shhhh! It’s TOP Secret: Fake News For Your Eyes Only

The absurd hysteria over Russia continues today from yours and my favorite Russia-hysteria promotion site: the Washington Post.

Fake News For Your Eyes Only

Today’s joke of the day is an “exclusive” fake-news story from WaPo regarding Obama’s Secret Struggle to Punish Russia for Putin’s Election Assault.

Early last August, an envelope with extraordinary handling restrictions arrived at the White House. Sent by courier from the CIA, it carried “eyes only” instructions that its contents be shown to just four people: President Barack Obama and three senior aides.

Inside was an intelligence bombshell, a report drawn from sourcing deep inside the Russian government that detailed Russian President Vladi­mir Putin’s direct involvement in a cyber campaign to disrupt and discredit the U.S. presidential race.

But it went further. The intelligence captured Putin’s specific instructions on the operation’s audacious objectives — defeat or at least damage the Democratic nominee, Hillary Clinton, and help elect her opponent, Donald Trump.

The material was so sensitive that CIA Director John Brennan kept it out of the President’s Daily Brief, concerned that even that restricted report’s distribution was too broad. The CIA package came with instructions that it be returned immediately after it was read. To guard against leaks, subsequent meetings in the Situation Room followed the same protocols as planning sessions for the Osama bin Laden raid.

Obama told Putin that “we knew what he was doing and [he] better stop or else,” according to a senior aide who subsequently spoke with Obama. Putin responded by demanding proof and accusing the United States of interfering in Russia’s internal affairs.

The Washington Post is withholding some details of the intelligence at the request of the U.S. government.

Detailed Timeline of Allegations

In its “exclusive” fake news article, WaPo provided a detailed timeline of every allegation. It provided zero proof of anything.

WaPo even mocked Wikileaks for demanding proof.

…click on the above link to read the rest of the article…

Lies of the Beholder: Biden Congratulates Ukraine for “Success” as Prime Minister Resigns Over “Artificially Created” Crisis

Lies of the Beholder: Biden Congratulates Ukraine for “Success” as Prime Minister Resigns Over “Artificially Created” Crisis

Today, Ukraine’s Prime Minister Arseniy Yatseniuk resigned, accusing the president’s party of plunging the war-scarred and recession-ravaged country into an “artificially created crisis”.

In response, US vice-president Joseph Biden’s office congratulated the Ukrainian government for a job well done.

In a surreal story difficult for even The Onion to make up, please consider Ukraine’s Prime Minister Arseniy Yatseniuk Resigns.

Ukraine’s prime minister tendered his resignation late on Sunday afternoon, accusing the president’s party of plunging the war-scarred and recession-ravaged country into an “artificially created” crisis.

“The country’s political crisis was unleashed artificially . . . the desire to change one person blinded politicians and paralysed their will for real change,” Mr Yatseniuk said on Sunday, adding that his formal resignation letter would be submitted to parliament on Tuesday.

In a statement, US vice-president Joseph Biden’s office said that, in a phone conversation with Mr Yatseniuk on Sunday, he: “congratulated the government of Ukraine on its accomplishments over the past two years, in particular on the strides it has made on difficult but necessary economic reforms, the signature of the European Union association agreement, and the work it has done to increase energy independence”.

In a Financial Times interview earlier this year, Mr Yatseniuk complained of being “stabbed in the back” after he faced relentless criticism from presidential MPs over unpopular austerity measures that were parts of a $40bn international lifeline from the International Monetary Fund and other global institutions. Efforts to shift blame for the raising of utility tariffs, for example, on to his political grouping had dented his popularity, fuelled political infighting and derailed the IMF-led programme.

…click on the above link to read the rest of the article…

Eurozone Debt Just Keeps Rising—–What Austerity?

Eurozone Debt Just Keeps Rising—–What Austerity?

The eurozone is supposedly in a state of recovery. However, in spite of that recovery, public debt and debt-to GGP levels are still rising. Austerity is difficult to find in any realistic sense.

Please consider Eurozone Borrowing Rises to Record as Recovery Remains Weak.

The European Central Bank’s programme of quantitative easing has pushed down interest rates to ultra low levels, encouraging governments to borrow more in the early part of this year, despite turmoil in Greece.

Across countries that use the euro, average debt to gross domestic product reached 92.9 per cent in the first quarter of 2015, up from 92 per cent in the previous quarter and 91.9 per cent in the same period last year, according to figures from Eurostat, the EU’s statistical agency.

Greece remains the EU’s most indebted nation, with debt equal to 169 per cent of annual GDP, but Italy, Belgium, Cyprus and Portugal also carry government debt that exceeds 100 per cent of economic output.

The rise in debt comes despite a pickup in the pace of recovery in the eurozone, with the region’s economy expanding 0.4 per cent in the first quarter of this year — while the US saw a contraction.

Targets vs. Reality

The “Growth and Stability” pact on which the Eurozone was founded limits debt to 60% of GDP and deficits at no more than 3%.

Average Debt-to-GDP is 92.9% and rising.

Eurostat Data shows Ireland, Greece, Spain, France, Cyprus, Portugal, Belgium, Slovenia, and Finland all exceeded 3% budget deficit requirement in 2014.

France and Spain have been given warnings and extensions on numerous occasions.

Greece Sideshow

By any realistic measure, Greece is just a sideshow for what is to come.

Pater Tenebrarum at the Acting Man blog pinged me with this comment: “The true reason for the bust of Greece and other countries – apart from their truly atrocious socialist policies and abominable corruption – isfractional reserve banking. The euro has of course enabled an even bigger credit boom and bust than would have been the case otherwise, but it is not the fixed exchange rate that is at fault, it is the underlying economic policies and the monetary system as such.”

 

…click on the above link to read the rest of the article…

Olduvai IV: Courage
In progress...

Olduvai II: Exodus
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