Eye On Germany: Continuing To Add To Their Relative Positives

EYE ON GERMANY: RELATIVE STRENGTH
The German service sector is faring better than other big economies in the EU… this adds to a growing list of reasons why we still prefer Germany over the rest of the “legacy” European economies.

In addition to deflating Euro Zone CPI numbers, another big data point arrived in Europe today with the release of service industry December PMI figures. Although the data showed decline across the board, it is significant that German business conditions for the service sector registered at 46.57 vs. 42.06 for the Eurozone as a whole and significantly higher than both France and Italy –each of which levels below the aggregate (see chart below).

This clearly supports our thesis that the German economy is structurally best positioned to rebound relative to its neighbors. We will continue to watch for opportunities to buy back our position in Germany (on weakness) via the EWG etf to balance against our short positions in other parts of Europe.

Andrew Barber
Director