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Editor's Note: Below is a brief excerpt from today's  titled "The Evolving Process," written by Hedgeye Senior Macro analyst Darius Dale. In the excerpt below, Dale explains why we're bearish on European economic growth. Click here to learn more about the Early Look.

3 Reasons to Be Bearish on Europe - stop sign

1. Backward-looking cyclical view

Real GDP growth in the Eurozone accelerated to a 6.5-year high of +2.1% YoY in Q2, but all the leading data we’ve seen reported for Q3-to-date (PMIs, consumer confidence and business confidence to be specific) is suggestive of a negative inflection off those highs. Moreover, YoY core inflation has yet to breach the top end of the +0.6% to +1.2% range it’s been stuck in for the last four years.

3 Reasons to Be Bearish on Europe - Chart of the Day 8 3 17

2. Forward-looking cyclical view

Base effects for Eurozone GDP growth are incredibly challenging over the NTM, while base effects for Eurozone CPI continue to steepen.

3 Reasons to Be Bearish on Europe - base effects eurozone

3. Key secular forces

Demographic headwinds get considerably more difficult throughout the Eurozone over the next 3+ years, while other key structural indicators suggest that Europe is still, well, Europe. 

3 Reasons to Be Bearish on Europe - 07.24.17 EL Chart