On Monday, March 26, I downgraded Europe to an underweight among global stock markets. The latest batch of economic indicators confirms that the region is in a recession. M2 money supply growth rates are plunging in Greece (down -16.8% y/y through February), Spain (down -4.7%), and Portugal (-3.8% through January). It is up only 1.3% through February in Italy.
Germany’s M2 is up 7.5% y/y through February. Some of that growth is coming from Greece, Portugal, and Spain, where money supplies are falling as depositors move their funds to banks they deem to be safer in Germany. That’s not helping the German economy.
This morning, we learn that German industrial production fell 1.3% in February to the lowest level since January 2011. It is down 4.6% from last year’s cyclical high during July. German manufacturing orders edged up 0.3% during February, but also remain well below last year’s high. Foreign orders for German capital goods and consumer goods from the Euro Area are down sharply in recent months.
TODAY’S BULLET POINTS: (1) Wobbling around 1400. (2) Overbought. (3) Bears wanted. (4) Goldman’s call of the mild. (5) FOMC says economy improving, maybe. (6) Are falling commodity prices bullish? (7) Continuing to underweight Europe. (8) Why do analysts expect big jump in earnings growth? (9) A happy bunch of US employment indicators. (10) Europe is falling into a recession. (More for subscribers.)