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Below is a list of our Eurozone Publications for the last 6 months. If you are looking for reports older than 6 months please email firstname.lastname@example.org, or contact your account rep
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In one line: Solid headline, but real M1 growth is still falling.
Soft money data rounded up a week of gloomy leading indicators for EZ GDP last week.
ISTAT data lend support to our view that Italy, along with Germany, is leading the EZ downturn in H2.
The sour data spooked some ECB members, but the ECB is not about to turn dovish.
Equities want to believe in a monetary policy pivot; we don’t share their optimism.
Valuations are now attractive for EZ equities, but we still think earnings have further to fall.
Eurostoxx 50 will fall 4% by year-end; we see gains of 10% and 13% in ’23 and ’24, respectively.
The EZ GDP deflators are going haywire; keep an eye on the difference between real and nominal growth.
Soaring import prices mean that the GDP deflator is rising by less than the deflator for domestic demand.
Our forecasts imply a peak in the GDP deflator in Q3, but growth will remain above average through 2024.
In one line: Inflation is weighing heavily on sales heading into Q3.
Risks are tilted towards a downward revision of Q2 GDP growth in Germany, to a small contraction.
Near-real-time data in Germany are holding up, but surveys and real M1 growth are terrible.
Germany is now likely in recession; we expect tentative signs of a rebound by Q1-23.
Strong EZ macro data signal a 50bp hike in September, but we no longer see a hike in February.
The German economy stalled in Q2, setting the scene for a technical recession in H2....
...EZ GDP rose by a solid 0.7% q/q in Q2, but we think it will be revised lower in time, probably to 0.4%.
The slowdown in real M1 growth continues to suggest that the EZ economy is now in recession.
ISTAT’s ESI for Italy for July supports our view that Italy, with Germany, will be drags on EZ activity in Q3.
Consumers are shifting their attention to the worsening economic environment.
The PMIs now warn that the EZ economy is sliding into recession, consistent with our outlook.
Inflation and supply-side pressures are easing, but not quickly enough to offer any near-term relief.
The ECB is caught in a stagflationary vice; it will continue hiking even as growth slows.
Italy’s overall aid to offset rising living costs still trails that in Spain, despite new fiscal support.
The measures announced so far likely won’t fully offset the hit to real incomes from higher inflation.
Windfall taxes are not enough, and further debt issuance will keep a floor under debt servicing costs.
Wages are rising across the Eurozone’s largest economies, but nowhere near as quickly as inflation.
The squeeze on incomes will ease over the coming months as inflation falls, but it will remain severe.
A wage-price spiral is a risk for markets and the ECB next year, even with ’normal’ real wage growth.
Forecasting recessions is risky, but that’s where we think the EZ is headed, all the same.
A thawing of the relationship with Russia and excess household savings could prevent the downturn...
...So could stronger-than-expected capex and net exports; we doubt any of these will ride to the rescue.
The details of the June PMIs are not pretty; we are more convinced the EZ is entering a slowdown.
We now think the EZ will be unable to avoid entering a technical recession in Q4.
This will set a weak base for next year; we forecast just 1% GDP growth in the EZ in 2023.
The neutral rate in the EZ is falling over time; it was likely negative immediately after the financial crisis.
We estimate the long-run neutral real rate to be 0.7% in the EZ, but the ECB policy rate won’t get that far.
We see the terminal ECB rate at 1.2-to-1.3%, 0.7-to- 0.6pp below current market-pricing.
The Irish boost to EZ GDP growth in Q1 will have a reverse impact on growth in the second quarter.
We now expect EZ GDP growth of 0.4% quarter-on-quarter in Q2, 0.1pp lower than previously.
The risks to our forecast for a weak H2 are to the up-side, especially if the gas embargo remains elusive.
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