Editor's Note: Below is a brief excerpt from our weekly macro newsletter Market Edges. Click here to learn more about Market Edges.
It's been a great run for global economic growth. However, after a multi-quarter "synchronized global recovery," we think this increasingly consensus narrative is played out.
The cracks are becoming more evident with each passing day.
In Europe, the data continues to confirm our #Quad4 (Growth and inflation slowing) forecast for Q1, at the margin:
- Eurozone GDP printed +2.7% Y/Y in Q4, which was an acceleration from +2.6% Y/Y in Q3 to a new cycle high, and quite possibly as good as it gets from a growth perspective.
- Eurozone Headline CPI decelerated to +1.2% YY (-10bps sequentially) and is trending lower. The December print was +1.4% YY, and the November print was +1.5% YY.
- Eurozone PPI for January was +1.5% Y/Y which was a sharp deceleration from +2.2% YY in December (+2.8% YY was the November print). We see trending deceleration across inflation readings.
- Italy Services PMI ticked down to 55.0 in FEB from 57.7 in JAN; trending lower;
- Composite PMI ticked down to 56.0 in FEB from 59.0 in JAN; trending higher
- France Services PMI ticked down to 57.4 in FEB from 59.4 in JAN; trending higher; Composite PMI ticked down to 57.3 in FEB from 59.6 in JAN; trending higher
- Germany Services PMI ticked down to 55.3 in FEB from 57.3 in JAN; trending higher; Composite PMI ticked down to 57.6 in FEB from 59.0 in JAN; trending higher
- Eurozone Services PMI ticked down to 56.2 in FEB from 58.0 in JAN; trending higher; Composite PMI ticked down to 57.1 from 58.8 in JAN; trending higher
- Eurozone Real Retail Sales accelerated to +2.3% YoY in FEB from +2.1% in DEC; trending sideways
We’ve been quantitatively loud about our view that consensus was seemingly most bulled up on European equities, the Euro currency, and the Eurozone economy at the wrong time heading into 2018.