This morning we received preliminary December Manufacturing and Services PMIs for Germany, France, and the Eurozone aggregate. The data showed broad improvement in Germany (services slightly lighter) and the Eurozone month-over-month, while France declined, which is in-line with our Q4 macro themes #EuroBulls and #GrowthAccelerating in the UK and Germany:
- Germany PMI Manufacturing 54.2 DEC Prelim (exp. 53) vs 52.7 NOV
- Germany PMI Services 54 DEC Prelim (exp. 55.3) vs 55.7 NOV
- France PMI Manufacturing 47.1 DEC Prelim (exp. 49) vs 48.4 NOV
- France PMI Services 47.4 DEC Prelim (exp. 48.7) vs 48 NOV
- Eurozone PMI Manufacturing 52.7 DEC Prelim (exp. 51.9) vs 51.6 NOV
- Eurozone PMI Services 51 DEC Prelim (exp. 51.5) vs 51.2 NOV
- Eurozone PMI Composite 52.1 DEC Prelim (exp 51.9) vs 51.7 NOV
For more on our global macro outlook, please see my colleague Darius Dale’s recent note “#GrowthSlowing (Lots of Charts)”.
Domestically in Germany, over the weekend there were further coalition agreements between the center-left Social Democrats and Merkel's conservative party, including key appointments. Merkel could be official confirmed as Chancellor as soon as tomorrow, nearly three months after the election.
- Wolfgang Schaeuble will maintain his post as Finance Minister (expected)
- Ursula von der Leyen named Defense Minister – formerly the Labor Minister. We think Merkel may be tapping her as the CDU’s next Chancellor candidate with this appointment
- SPD Chairman Sigmar Gabriel head of newly configured Economy Ministry
- We continue to like German equities via the etf EWG. The DAX held our quantitative intermediate term TREND line of support at 8,876 last week. We’ll be watching for evidence of strength (and a buying opportunity) via an improving positive correlation between the EUR/USD and the DAX.
- Trading above its quantitative TRADE, TREND, and TAIL levels = Bullish breakout. etf (FXE)
- Supported by Fed’s expectation to push out taper = Dollar bearish
- Supported by positive data from Eurozone (for more see a recent note “Just Charts - #EuroBulls”)