Over in Europe, one of the worst-performing stock markets is in Germany. The German MSCI is down 15.3% YTD. This reflects the dramatic weakening in Germany’s economy in recent months. The Eurozone’s recovery since last summer was very slow and fragile.
The region’s economy seems to have been especially hard hit by the Ukraine crisis and the sanctions imposed against Russia. That’s especially so for Germany, where manufacturing orders dropped 5.7% during August to the lowest level since May 2013. Industrial production excluding construction plunged 4.3% during the month to the lowest since January 2013. The situation might have actually worsened during September given that Germany’s M-PMI dropped below 50.0 to 49.9, the lowest since June 2013. This series is highly correlated with the expectations diffusion index of the Ifo Business Climate Index, which dropped below zero for the first time since January 2013.
Today's Morning Briefing: Dollar Play. (1) Home field advantage. (2) No currency risk at home. (3) “Stay Home” still beating “Go Global.” (4) Is the strong dollar bullish or bearish for stocks? (5) The short answer: Bullish on a relative basis. (6) Three trends since 1995. (7) From US-centric to China-centric, and back again. (8) Germany hard hit by Ukraine crisis. (9) Depreciations of euro and yen won’t help Eurozone and Japan, but should benefit US MSCI relative to other major stock markets.
