Pictet's Four Horsemen Of The Euro-pocalypse

Tyler Durden's picture

Via Perspectives Pictet,

Euro area industrial production decreased in November, for the third month running, and reached its lowest since April 2010. Indeed, industrial production fell by 0.3% m-o-m in November, worse than the 0.2% m-o-m rise expected. The October figure was revised up marginally from -1.4% m-o-m to -1.0% m-o-m.


Industrial production plunged for all periphery countries
In terms of country, the industrial production figures were mixed with 8 out of 12 countries experiencing negative m-o-m growth. It is worth noting that all periphery countries recorded a sharp monthly decrease: Italy: -1.0%, Spain: -2.5%, Greece: -1.5%, Portugal: -3.4% and Ireland: -1.1%. As a result, the rate of recovery in the periphery remains well below the average. As for core countries, industrial production increased slightly in Germany (0.1% m-o-m) for the first time since July 2012. France and the Netherlands also posted positive growth, 0.5% m-o-m and 1.0% m-o-m respectively.


Trough in Q4?
Recent business surveys (PMIs, Ifo, Insee and Isae) have confirmed a stabilisation in activity, albeit in negative territory. So there is still hope that Q1 could see some improvement in core countries, but yesterday’s result are more evidence of further contraction in Q4.


Deeper contraction in Q4
On average, October and November industrial production combined plunged 2.4% compared to Q3, significantly lower than the 0.3% q-o-q recorded in Q3. This tends to confirm our scenario of a strong contraction of overall economic activity in Q4. Therefore, we are standing by our forecast of -0.4% q-o-q real GDP growth in Q4, -0.4% for the whole of 2012 and -0.3 % for 2013 (consensus -0.1%).


Current optimism likely to be challenged by poor economic data
Despite hope of an improvement in activity in Q1 2013, the overall picture remains very gloomy, especially for the periphery countries. Without external help (ECB unorthodox measures, fiscal federalism, etc.) these countries are likely to remain entrenched in recession. As a result, doubts about their ability to service their debt are likely to resurface and therefore to dent the optimism currently prevailing on financial markets.


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Ghordius's picture

ho ho ho, how strange, a bank asking for fiscal federalism in the eurozone /s

Snakeeyes's picture

Germany, France and Spain all having slowing or tanking GDP. Socialism, a model for catestrophic failure!

walküre's picture

Germany is pulling their gold from the storage in NY and Paris. Hopefully the fuckers in Berlin are buying gold with the money that's supposed to get transferred to Greece and other bottomless pits. For once, I really hope they have the foresight to do it right.

NotApplicable's picture

Hey, what's with this Hopium binge?

Spitzer's picture

Typical ZH Euro hit piece...


What about the fact that all of the PIIGS have erased their current account deficits and are now in surplus ?

BlueCheeseBandit's picture

What about the fact that central banks are pulling out all the stops to create misinformation like this for gullible sheep who don't understand how the world works?

French Frog's picture

When a current account surplus has only been achieved because import have been decimated by lower internal demand, this is a sign of a deepening recession and not of an improvement in the state of affairs.

This is basic economics Mr Spitzer, and something that the MSM prefers to ignore because the real issues are too complicated for most of the sheep to grasp in a 1-liner... 

Spitzer's picture

It is a sign of people living within their means. Period.

 Higher rates, which they are paying, is negative  to the current account. Remember that..So the US's trade deficit could fall but if rates rise, the current account deficit will not fall. 

It would be better if it happened faster like in Iceland but Greece and Spain are way further on their way to recovery then the US.

tango's picture

Account balance has more to do with trade than with budgets.  Nations with surpluses (Asian) spend less money at home than they take in from abroad.  The reverse is true for deficit nations (EU, US, Japan) 

I maintain that nations with unemployment rates of 25% are not in good shape no matter what metric is use. Spain, Portugal and Italy are sending less abroad because their capacity to buy is rapidly dwindling.  They are sustained only by constant selling of debt (to idiots).

Spitzer's picture

Account balance has more to do with trade than with budgets.

Not true. If a countries interest payments go up, the current account deficit can rise even if the trade deficit is falling.

Silver Bug's picture

If the EURO collapses then the US dollar will follow quickly behind it.

Spitzer's picture

That's backwards.

The Eurozone is a net creditor and even the PIIGS are now in current account surplus territory

surf0766's picture

Forward. Our new destiny !

Jayda1850's picture

And the euro at $1.33. Everyday I feel like I'm living in bizzaro world.

CPL's picture

It's not the comparison though anymore.


All fiat currencies are lowering themselves against one another.  What it is compared to now, if you want to keep apples to oranges, is real commodity prices.

Jayda1850's picture

Agreed. With Japan, UK, and US firmly in the money printing camp, I dont see the euro dropping unless OMT is activated and the ECB joins the ctrl+p party.

walküre's picture

Greece, Spain, Portugal and Italy are going to abandon the EURO this year. There is no other way.

Jayda1850's picture

TPTB will never let that happen. Its gotten to the point where any institution (be it government,company, or bank) can be deemed TBTF, even little cyprus isnt being allowed to restructure debt. The banks will continue to prop up the status quo and institutions to ensure continuing payment to their pockets.

CPL's picture

They'll try.

But what will blow your mind is so will France.

CPL's picture

They have been for three years.  Don't forget money is fungible, any money created is counted.  The fact that someone printed money to pay a debt doesn't dismiss the effect.  

Any and all credit manufacturing done by the ECB or the FED or any central bank is counted, it's a vicious cycle once it gets moving..  It's why currencies aren't falling against one another in a spectacular fashion.  But against commodities they are viciously corrected.  

OMT or not, the die is cast for Europe mathmatically on all the outstanding debt, unfunded liabilities (Europe has many, certainly the ECB) and defense committments to someone else.  Plus interest. 


gatorengineer's picture

We are winning the great race to Debase.  Spain wont cooperate and ask for bailout......  Greece isnt bankrupting germany fast enough.  Give it time....

BlueCheeseBandit's picture

Temporary updrift as our debt ceiling puts downward pressure on USD. In the middle of the mess I'm going to double short EURUSD hard and inherit the earth.

IridiumRebel's picture

Ride Capt. Ride, upon your mysery ship!

Jonas Parker's picture

European obamanomics at it's best. Meantime, the Brits tell "0" politely to "naff off". Don't you just love it when a plan comes together then spectacularly falls apart?

AccreditedEYE's picture

Annnnnd Europe will CONTINUE to do nothing to really fix deep, horrible structural imbalances. Maybe we can print them some prosperity....

See how we erased the losses and are now positive on the day? WITH plenty of horid global economic data! Stocks to the moon... death to money!

Spitzer's picture

Besides the fact that the EZ has always been a net creditor , are you aware that Greece and Spain have current account surpluses ? That they never had before ?


AccreditedEYE's picture

Ya, forget what I just said Spitzer, you guys are doing a grand job over there... at least as good as the U.S. Carry on.

THE DORK OF CORK's picture

If you go into a current account surplus you are most likely a colony.

The imperial base of operations can therefore remain in deficit.

Its nothing to brag home about.

Its a mark of shame really.


Besides Greece is only seen to go into current surplus during the summer months (tourism , perhaps less heating oil etc etc)

Surprise !! Spain has gone into a marginal surplus............ stupid Bitches.

Only Ireland is in major current account surplus (multinational operations)


These countries must essentially shut down domestic operations / commerce so as to repay external debt to the North.


What was the purpose of the Euro again ?


Spitzer's picture

I dunno...

Why are countries lining up to join it ?

THE DORK OF CORK's picture

Well thats obvious now Spitz.


Each of these jurisdictions is run by a oligarchy who benefit from a extraction of labour value.

Dr. Engali's picture

I decided to go to Walmart to see if it was true about them being told to not order any ammo and its I cleaned them out of 270 rounds and figured I'd get some. 22 rounds. Well they were out. So I decided to check the local stores and I was surprised to see that in a city of 50k people there wasn't one box of . 22 rounds to be had.

gatorengineer's picture

You arent alone, that situation is everywhere.... Now look at the price of Ammo.....  That jump alone will drive retail sales increases in Jan.

Dr. Engali's picture

The scarcity of higher caliber rounds didn't surprise me, I actually located some .223 locally, although it was Wolfe and I won't run that ( I will barter it though), but it was that lack of .22 rnds that surprised me.

10PastMidnight's picture

Dont worry about running the Wolfe rounds, Benny had them change out the aluminum casings with platinum casings, just incase we need to barter for fooooood.

walküre's picture

Watch prices on ammo going to double or triple at black market sales.

Ammo is the new currency.

End game.

yogibear's picture

But Europe is getting better (sarc).

Rename to  Your rope. Now hang yourself EU.

Dark_Horse's picture

Euro indications heading down still? Speed up the money printing! Double-time!!

Choose your own ending...

A) Lost decade

B) Lost double-decade

C) Done



lolmao500's picture

While America's apocalypse is coming... Civil war number 2.

joego1's picture

Hey this isn't what there saying on T.V.

cranky-old-geezer's picture



Same picture here, why pick on Europe?  Our govt is just like Greece, no difference.

nobusiness's picture

So countires that need bailouts tell the truth about falling demand and countries that pretend they can save the EU lie and say groth is still happening.  Why doesn't anyone discuss the fact that all industrialized countries need to reduce deficit spending yet all economist project 1 to 2% growth (used to be 2-4%) for 2013 and acceleration into 2014???  when is the last time an economist has projected negative growth???

crzyhun's picture

You MEAN that Mari O Draggi is wrong? Sacre blew!

q99x2's picture

Look out Greece here we come. Banksters have the countries falling like a flock of blackbirds hit by a shotgun blast.

orangegeek's picture

And the Euro keeps climbing.


Which of course means the US Dollar is falling.


Once the Euro completes its move up, things are going to get very ugly.

10PastMidnight's picture

Fuck, this means more than three people woke up this week and didn't drink the Bennykoolaid. Does anyone think they'll open up the west wing of the whitehouse for the homeless soon?