Pre-NFP Party Spoiled By Reality, Bundesbank And Another Japanese Earthquake

Tyler Durden's picture


In a day in which it was all supposed to be about today's far weaker (because there is a perfectly good alibi in the face of Hurricane Sandy) Nonfarm payroll report, expected to print at 85,000, due out in 2 hours, once again it is the the "rest of the world" that stole the scene, starting with a reality slam out of Germany whose Bundesbank came out with revised forecast for German economic growth, which collapsed projected 2013 growth from 1.6% to a tiny 0.4%, adding that there are "growth projections risks to the downside" in effect all but sealing Germany's recessionary fate in the coming year, and send the EURUSD to overnight lows.

Specifically, the Bundesbank sees:

  • German 2012 real GDP at 0.7%%, was 1.0%, and 2013 at 0.4%, down from 1.6%.
  • German 2012 inflation 2.1% (2.1%), 2013 1.5% (1.6%)
  • German 2012 unempl rate 6.8% (6.7%), 2013 7.2% (6.5%)
  • Drop in germany economic activity possible in 4q 2012,1q 2013
  • See German 2014 GDP +1.9%, infl +1.6%, unemployment 7.0%
  • Bundesbank Weidmann: underlyng german econ health suggests fast recov
  • EMU crisis, global slowdown main drags on german growth
  • Risks to Germany growth projections to the downside

Sure enough, as if to confirm this forecast, moments ago German Industrial Production in October tumbled -2.6%, on expectations of an unchanged print. None of this should come as a surprise to our readers whom we have been warning for weeks and months that the European economic malaise is spreading closer to the core with each passing day.

What this means is that as we have been saying for months, slowly but surely the narrative that the ongoing German bailout of Greece is crushing the AAA-rated economy will become louder and louder until it is the German people themselves who demand a severing of all ties with Greece.

And speaking of Greece, there are simply no words to explain the stupidity of what may be happening there. Perhaps the following Bloomberg headline captures it best: Greece to Buy Debt It Already Owns to Reach Target. While this in itself is idiotically absurd, what it does mean, is that the debt buyback is going not quite as well as expected and hedge funds will likely demand even higher conversion prices. And who can blame them: the Eurozone rolled over and died the second someone demanded beneficial terms for hedgies, who are the only beneficiaries from the "third Greek bailout." And since all of this is orchestrated and funded indirectly by the ECB, another BBG headline that is not at all surprising is that "Draghi’s Go-to ECB Seen Risking Credibility Through Overload." What is amazing is that the ECB still has any credibility left.

There was more bad news out of Europe (NetherlAAAnds industrial production which also missed,

Elsewhere, a major driver of macroeconomic risk was a large Japanese 7.8 Magnitude earthquake hitting the northeast coast, and producing a moderate contained tsunami, although nothing like that from March 2011. The initial response sent the JPY higher briefly but since normalized after the quake was seen as being nowhere near as destructive as the last one. What it did, however, remind us is that despite any and all promises of imminent inflationary nirvana by incoming PM Shinjiro Abe, Japan's fate may be far more acutely determined by mother nature first and foremost. But at least the Shanghai Composite is still going through the phases of the latest dead cat bounce, rising 1.6% to close at 2062, well above the 4 year lows seen earlier this week.

But not all was bad news as Icelandic Q3 GDP rose Q/Q by 3.5%. And so the country that escape the Keynesian black hole tractor beam continues to grow by leaps and bounds as the rest of the insolvent world continues to stick its head in the rehypothecated sand.

And now, lean back, grab your popcorn, and wait as the media spin tsunami washes over everyone and proves how a sub 100K increase in November jobs is actually a good thing in a country which needs to grow by nearly 200K/month to offset the effect of 5 years of ongoing depression.

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Fri, 12/07/2012 - 08:06 | 3042019 GetZeeGold
GetZeeGold's picture



I don't think the heavy stuff is going to come down for quite some time.

Fri, 12/07/2012 - 08:06 | 3042024 NewThor
NewThor's picture

You forgot to include that I busted NASA red handed.

Doom on?




Fri, 12/07/2012 - 08:16 | 3042034 krispkritter
krispkritter's picture

GeeZee, always found a Bishop using the line '...I was hoping to squeeze in 9 holes...' to be particularly disturbing...

Fri, 12/07/2012 - 08:59 | 3042078 Mae Kadoodie
Mae Kadoodie's picture

Japanese earthquake on Pearl Harbor Day. Symmetry.

Fri, 12/07/2012 - 08:18 | 3042036 GetZeeGold
GetZeeGold's picture



We can still get in 9 holes......if you don't mind teaming with NASA.

Fri, 12/07/2012 - 09:04 | 3042083 JPM Hater001
JPM Hater001's picture

U MESS A baby.

Fri, 12/07/2012 - 08:27 | 3042046 EscapeKey
EscapeKey's picture

Looks like either an equipment failure or an MPEG2 compression error to me.

Fri, 12/07/2012 - 08:17 | 3042035 flattrader
flattrader's picture

Depends on how you define "heavy stuff."

I ran across this while trying to find out details on the Jap EQ

kuma shutsubotsu chuui said...

Yes, I was just e-mailing a friend to that effect: it's almost identical in all the major parameters to the pre-quake on March 9 last year, but it felt stronger.

March 9, 2011 quake (in Japanese):

Dec. 7, 2012 quake:


So, there could be another EQ of greater magnitude to come.

Those damaged Fuku reactors can't take too much more shaking or flooding.  The damaged RPVs and spend fuel pools are still in place.  Virtually nothing has been removed from the site.


Fri, 12/07/2012 - 08:21 | 3042040 JPM Hater001
JPM Hater001's picture

Hope was removed.  They needed some super charged at the Fed.

Fri, 12/07/2012 - 08:05 | 3042020 EscapeKey
EscapeKey's picture

Germany reducing growth rates - DAX down 0.2%, so clearly it was priced in already.

Fri, 12/07/2012 - 08:12 | 3042031 smlbizman
smlbizman's picture

maybe when our senate is done picking  "dr." mark zandi's brain on what to do, we can lend him to germany...

Fri, 12/07/2012 - 08:05 | 3042021 PUD
PUD's picture

While all true, perhaps you missed this invitation for moar QE!! US stocks should hit a 52 week high shortly as the worse it is the better it is.

Fri, 12/07/2012 - 08:19 | 3042023 francis_sawyer
francis_sawyer's picture

All I want for Christmas is Icelandic citizenship... Most ZHers would have to bone up on their boating skills before ever considering moving to Iceland though [if you know what I mean]...

Fri, 12/07/2012 - 08:30 | 3042043 francis_sawyer
francis_sawyer's picture

Now that's what I'm talking about... Back in the day when francis_sawyer was a broncin' buck... I was presenting this seminar in Copenhagen (whereby a pair of Icelandic hotties were attending)... We got along pretty well and went out on the last night and afterwards, remained in communication... I was living in Los Angeles at the time and told them if they ever wanted to come visit, then they should just feel free... Next thing I know, they & about a half dozen of their friends show up at my place in LA... They all stayed for about a week and it was one big huge slumber party in my flat for a week... A good time was had by all...

Funny thing too was that the time period was all during the Rodney King trials...

Fri, 12/07/2012 - 08:10 | 3042027 snowlywhite
snowlywhite's picture

buy the dip; honestly...


and yeah, I know it doesn't make sense; but than, ppl. are stupid anyway. Could as well make money...

Fri, 12/07/2012 - 08:11 | 3042030 zilverreiger
zilverreiger's picture

South Korea and China signed a 45B USD,  USD evading trade swap deal earlier this week.

Fri, 12/07/2012 - 08:13 | 3042032 krispkritter
krispkritter's picture

Purported to be Fukushima during this latest eathquake.

Those reactor buildings cannot be happy...

Fri, 12/07/2012 - 08:14 | 3042033 Catullus
Catullus's picture

Do we get to call it a Mishkin Moment when people realize that Keynesianism is bullshit?

Fri, 12/07/2012 - 08:21 | 3042041 Caracalla
Caracalla's picture

According to Seeking Alpha (their #1 story this morning), the trade of 2013 is to SHORT GOLD.  What says the ZH community about this?? 

Fri, 12/07/2012 - 08:31 | 3042053 SmallerGovNow2
SmallerGovNow2's picture

GLD = paper gold, jus sayin'

Got physical?

Fri, 12/07/2012 - 08:36 | 3042055 Catullus
Catullus's picture

His argument was to short GLD at $171 and breakeven at $161.  Meaning this great "short bet" might yield 5-10% if you're lucky.  Some conviction.

He might be right though.  GLD is going to be worthless by the end of the decade anyway when it gets settled in cash.

Fri, 12/07/2012 - 09:02 | 3042082 No Euros please...
No Euros please we're British's picture

Seeking alpha conveniently forgot Gibson's paradox.

For every percentage point the REAL interest rate is below 2%, gold returns 8% year on year times that multiple.

If you believe real interest rates are -1.5% then gold should be up 28% next year.

Fri, 12/07/2012 - 08:23 | 3042044 Iam Yue2
Iam Yue2's picture

The contrarian indicator of the decade has to be Roubini turning positive on Greece. The man was, like a stopped clock right much did his company sell for in the end?

2013 will be the yeAr that austerity fatigue finally spills out onto the streets.

What would Penny Rimbaud say?

See for yourself @crasslyrics

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