The EU faces strong economic headwinds this year. Most forecasters are expecting a recession.
The Markit Economics PMI data showed a steep downdraft in output since early 2011, furthered
by negative or contraction readings until the Jan. 2012 flash report.
Now, as Aristotle was fond of saying, "one swallow does not a summer make", but it is interesting
that as the EU moves into the new year, there is a sharp bounce in activity levels in evidence, and
one which comes in the wake of the ECB's massive collateralized loan program to the EU banks.
Sharp positive reversals in PMI following sizable declines in activity levels into negative
territory do not normally indicate errant positive "blips" in an ongoing, heavy duty downtrend. So,
economic headwinds and recession forecasts notwithstanding, it could be unwise to put the EU to
bed before we see more data.
- Peter Richardson
- Retired chief investment officer and former NYSE firm partner with 50 plus years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!