EYE ON EUROPE: SINKING

European industrial orders declined by 26.2% in November on the year and -4.5% on the month, signaling another massively negative data nail in the Euro zone coffin. This was the largest single month drop since the Euro was introduced a decade ago.

On a relative basis there was plenty of pain to go around with orders declining for Germany, France and Italy by 29.3%, 27.7% and 27.2% respectively.

The sector hardest hit was transport equipment (including ships and railways) which fell 46% Y/Y -a quick look at the Baltic Dry Index will make it very clear that new ship orders will not be staging a comeback anytime soon. Orders for metals and machinery dropped 28% and 24% Y/Y respectively.

The EU officially expects the economy of the 16 nations that use the euro to shrink 1.9% this year. With European economic confidence at a record low and services and manufacturing activity contracting for a seventh month in December, this data point suggests that might be wishful thinking.

We will keep our eye on the Eurozone economies looking for trading opportunities (we are short the UK via the EWU ETF currently, but that is a different, and even worse, story altogether).

Matt Hedrick
Analyst

Andrew Barber
Director

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