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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Tue, 01/15/2013 - 13:27 | 3154425 Ghordius
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ho ho ho, how strange, a bank asking for fiscal federalism in the eurozone /s

Tue, 01/15/2013 - 13:35 | 3154453 Snakeeyes
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Germany, France and Spain all having slowing or tanking GDP. Socialism, a model for catestrophic failure!

Tue, 01/15/2013 - 13:52 | 3154513 walküre
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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.

Tue, 01/15/2013 - 14:17 | 3154603 NotApplicable
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Hey, what's with this Hopium binge?

Tue, 01/15/2013 - 13:36 | 3154457 CPL
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Tue, 01/15/2013 - 14:04 | 3154546 Spitzer
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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 ?

Tue, 01/15/2013 - 14:25 | 3154630 BlueCheeseBandit
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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?

Tue, 01/15/2013 - 14:46 | 3154704 French Frog
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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... 

Tue, 01/15/2013 - 15:44 | 3154938 Spitzer
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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.

Tue, 01/15/2013 - 14:59 | 3154769 tango
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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).

Tue, 01/15/2013 - 15:47 | 3154950 Spitzer
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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.

Tue, 01/15/2013 - 13:56 | 3154527 TideFighter
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An old classic. You're name is Roger, yeah?

Tue, 01/15/2013 - 14:03 | 3154542 Silver Bug
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If the EURO collapses then the US dollar will follow quickly behind it.

Tue, 01/15/2013 - 14:07 | 3154563 Spitzer
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That's backwards.

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

Tue, 01/15/2013 - 13:27 | 3154427 surf0766
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Forward. Our new destiny !

Tue, 01/15/2013 - 13:28 | 3154430 Jayda1850
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And the euro at $1.33. Everyday I feel like I'm living in bizzaro world.

Tue, 01/15/2013 - 13:46 | 3154492 CPL
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.

Tue, 01/15/2013 - 13:50 | 3154508 Jayda1850
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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.

Tue, 01/15/2013 - 13:53 | 3154520 walküre
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Greece, Spain, Portugal and Italy are going to abandon the EURO this year. There is no other way.

Tue, 01/15/2013 - 14:05 | 3154552 Jayda1850
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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.

Tue, 01/15/2013 - 15:25 | 3154853 CPL
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They'll try.

But what will blow your mind is so will France.

Tue, 01/15/2013 - 15:22 | 3154845 CPL
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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. 


Tue, 01/15/2013 - 13:46 | 3154497 gatorengineer
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We are winning the great race to Debase.  Spain wont cooperate and ask for bailout......  Greece isnt bankrupting germany fast enough.  Give it time....

Tue, 01/15/2013 - 14:28 | 3154644 BlueCheeseBandit
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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.

Tue, 01/15/2013 - 13:29 | 3154434 IridiumRebel
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Ride Capt. Ride, upon your mysery ship!

Tue, 01/15/2013 - 13:31 | 3154440 Jonas Parker
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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?

Tue, 01/15/2013 - 13:47 | 3154469 AccreditedEYE
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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!

Tue, 01/15/2013 - 14:10 | 3154576 Spitzer
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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 ?


Tue, 01/15/2013 - 14:25 | 3154627 AccreditedEYE
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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.

Tue, 01/15/2013 - 14:57 | 3154677 THE DORK OF CORK
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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 ?


Tue, 01/15/2013 - 15:50 | 3154960 Spitzer
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I dunno...

Why are countries lining up to join it ?

Tue, 01/15/2013 - 16:12 | 3155071 THE DORK OF CORK
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Well thats obvious now Spitz.


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

Tue, 01/15/2013 - 13:41 | 3154475 Dr. Engali
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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.

Tue, 01/15/2013 - 13:48 | 3154502 gatorengineer
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You arent alone, that situation is everywhere.... Now look at the price of Ammo.....  That jump alone will drive retail sales increases in Jan.

Tue, 01/15/2013 - 14:25 | 3154537 Dr. Engali
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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.

Tue, 01/15/2013 - 16:28 | 3155154 10PastMidnight
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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.

Tue, 01/15/2013 - 13:50 | 3154507 walküre
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Watch prices on ammo going to double or triple at black market sales.

Ammo is the new currency.

End game.

Tue, 01/15/2013 - 13:54 | 3154521 yogibear
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But Europe is getting better (sarc).

Rename to  Your rope. Now hang yourself EU.

Tue, 01/15/2013 - 13:59 | 3154536 Dark_Horse
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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



Tue, 01/15/2013 - 14:00 | 3154539 lolmao500
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While America's apocalypse is coming... Civil war number 2.

Tue, 01/15/2013 - 14:04 | 3154551 joego1
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Hey this isn't what there saying on T.V.

Tue, 01/15/2013 - 14:12 | 3154584 cranky-old-geezer
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Same picture here, why pick on Europe?  Our govt is just like Greece, no difference.

Tue, 01/15/2013 - 14:26 | 3154632 nobusiness
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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???

Tue, 01/15/2013 - 14:41 | 3154687 crzyhun
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You MEAN that Mari O Draggi is wrong? Sacre blew!

Tue, 01/15/2013 - 15:21 | 3154836 q99x2
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Look out Greece here we come. Banksters have the countries falling like a flock of blackbirds hit by a shotgun blast.

Tue, 01/15/2013 - 15:57 | 3154996 orangegeek
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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.

Tue, 01/15/2013 - 16:24 | 3155137 10PastMidnight
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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?

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