Juan Royo
14:26 – 15/08/2014
- The demand-driven policies have been ineffective Dragui
The Bag is not usually room for half measures. Bears and bulls continually confront their bearish or bullish arguments tend to settle in the short term. However, the chaos of markets knows no absolute locations. A lime and sand could be a top clarifying the current environment. And now it purge the bad news. We performing an exercise difficult imagination Bag, evaluate the macroeconomic conditions under which France and Germany and their influence on financial markets.
yesterday met the data of Gross Domestic Product (GDP) in the second quarter German and French. Paupers -0.2% and 0% respectively. As the joke, neither cold nor hot. Annualized, Germany moderates its annual growth rate to 1.2% and France to 0.1% (previous extrapolations were 2.3% and 0.8% respectively). Nothing new under the sun, however.
The expectations index ZEW August, reflecting the optimism of German investors and analysts, plummeted from 27.1 prior to 8.6, well below the 17 expected, at least since December 2012 And they go down eight months. German employers are neither clear: the business confidence index Ifo lowered again in July for the third consecutive month.
Not surprisingly, the industrial production in the Euro area recorded in June followed by its second monthly decline (-0.3% mom) pointing to a euphemistic year growth of 0%. Short of the giants of the European economy is shown with the last annual inflation data from Germany (0.8%), at least since 2010 and France (0.5%). The markets reflect these stunted growth forecasts and issue their verdict at midday yesterday, the profitability of German 10-year bond fell below 1% and up to 1.39% French, scoring in both cases new historic minimum . Germany and France never had funded so cheap. In the game of speculation in financial markets when some win, some lose. Risk premiums in the countries of the European periphery are located in Greece in 500, 260 in Portugal, Italy and Spain in 170, 150 basis points.
In terms of equities, the sadness of the German and French macroeconomic reality is reflected in the losses from early years suffer national stock indexes. Frankfurt’s DAX and CAC-40 in Paris to Eurostoxx50 crawl into negative territory.
The price declines in the stock market for European companies may have implied that the bags are cheap. However, the PER (Price earning ratio), ie the number of times the annual net profit of a company is included in your quote, seem to contradict this perception. To recover our investment in the German DAX would have to wait 15 years. For the CAC-40, 17 These ratios contrast with the five years required by the Russian MICEX Stock Exchange index or 19.8 of the S & P 500 American. The comparisons are odious, of course, and not just (markets with very different characteristics are compared).
Meanwhile, Europe is trying to put out the fires not yet extinct (or much less) of the crisis the public debt of the peripheral countries. The European Financial Stability Fund (EFSF) this week approved the payment to Greece in the last 1,000 million committed by the Ministers of Economy and Finance of the Eurozone in April. Taken together, the joke has finally come for 141,800 million.
The problems in Europe are not demand but supply. As demand policies aimed at boosting the president of the European Central Bank, Mario Draghi, or unconventional, are ineffective when not in conflict with a healthy growth. Another thing is to promote productivity, competitiveness, collaboration and sustainability. From the point of view of supply, of course.
John Royo, economist.
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