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Europe In Triple-Dip Recession, Goldman's Internal Model Finds
If today's European Commission slashing of Euro GDP forecasts did not leave a warm and fuzzy feeling in Europeans that the greatest depression ever is proceeding just as planned, if not quite as "forecast" as the following chart shows, confirming yet again that when it comes to predicting the future nobody can hold a candle to the Fed, the IMF or Europe...
... then here is Goldman with the loudest warning yet, courtesy of its internal RETINA model, that Europe is now effectively in a triple-dip recession, with Q3 GDP for the Euro area at -0.2%.
From Goldman's Huw Pill
RETINA retreats further into Q3 contraction
Bottom line: We are less than a fortnight away from Eurostat's publication of its flash estimate of Q3 GDP growth in the Euro area. In today's Daily, we look through the lens of our contemporaneous tracker of real-time inflation and activity. Since our previous update in mid-October, RETINA's median estimate of Q3 GDP growth has moved deeper into negative territory, driven largely by a disappointing print for area-wide industrial production in August. The downside risks to our +0.1%qoq judgemental forecast for Q3 GDP now look skewed to such an extent that our point estimate no longer falls within a 50% confidence interval around RETINA's median reading.
RETINA sees negative GDP growth in Q3
As Chart 1 shows, from mid-September to mid-October, RETINA's median estimate for third-quarter GDP growth (the red line in Chart 1) fell from around +0.3%qoq to just short of -0.2%qoq. Following a disappointing contraction in area-wide August IP on 14 October, RETINA's median estimate fell a further 10bp -- yet deeper into negative territory. Having stabilised at around -0.3%qoq in the past fortnight, RETINA's median estimate is now some 40bp weaker than our current judgemental forecast for Q3 GDP growth (+0.1%qoq, the black dotted line in Chart 1). This is yet more pessimistic than the latest available poll among other private-sector economists (collated on 8 September), which envisaged Q3 growth of around +0.35%qoq.
RETINA's latest leg lower is down (solely) to Euro area IP
As Chart 2 shows, the latest move lower in RETINA's median growth tracker (from around -0.2%qoq to -0.3%qoq) was driven almost exclusively by the 1.8%mom contraction in Euro area IP in August. Conditional on this out-turn, subsequent releases of national business surveys (ranging from the Italian ISTAT, the Belgian business survey and the French and German PMIs), as well as a +0.5%qoq sequential expansion in Spanish Q3 GDP, left our RETINA growth tracker largely unmoved.
The mechanical nature of the RETINA framework implies that it may underestimate the potentially significant 'calendar effect' in the German IP data (changes in the timing of holidays is likely to have shifted production out of August into July, as reflected in the month-to-month volatility of outturns). Some caution is required in interpreting the downward shift implied by these data, at least until we see the September print later this week. That said, the broadly confirmatory signal offered by business surveys (e.g. with the German IFO index continue to decline) suggest that idiosyncracies in the data should not be overstated.
RETINA suggests that degree of downside risk to our forecast has returned
As Chart 3 shows, RETINA's growth tracker implied an escalation of downside risks to our former (+0.4%qoq) judgemental forecast through most of September. The latest indications are that the intensity of that downside skew has returned through the course of October -- even as it pertains to our much weaker current forecast for +0.1%qoq growth in Q3. The Bayesian underpinning beneath RETINA's growth tracker allows us to quantify this skew. Chart 3 shows that the model-implied probability that Q3 growth beats our judgemental forecast has fallen to 25% -- down from around 35% at the time we made our forecast change. Furthermore, as Chart 1 also underscores, the downside risks to our judgemental forecast for Q3 now look skewed to such an extent that our point estimate no longer falls within a 50% confidence interval around RETINA's median reading.
So far, we have discussed RETINA's median tracking estimate. We can also track RETINA's modal estimate of GDP growth - that is, the single estimate of sequential growth that the models deems more likely. As Chart 4 shows, this modal estimate has been broadly unchanged over the past month.
* * *
There is some good news:
It is still too early to be emphatic, but RETINA seems to object less to a small expansion in Q4 GDP than it does to a positive print in Q3.
And that is, what in the New Abnormal, passes for good economic news.
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dang... and we just included all those hookers and blow to beef up those numbers...
anybody has any other bright idea's?
...
you can included them twice because ... do they need a reason really?
Gives new meaning to the term "sloppy seconds".
Good this is happening. The sooner it starts, the sooner it ends.
. . . to my eye, RETINA seems detatched —
Bullish
Only for the US markets. We have decoupled from the world. Europe has been crashing while our markets keep rising.
Boy I'd like to triple-dip into HER recession!
Goldman to Europe; "You fucked up, you trusted us..."
a fortnight away!
"The downside risks to our +0.1%qoq judgemental forecast for Q3 GDP now look skewed to such an extent that our point estimate no longer falls within a 50% confidence interval around RETINA's median reading."
Wow, WTF. Why bother "predicting" shit when the confidence level is wide enough to drive a truck through?
Shit, flip a fucking coin. People actually put their money in with these guys?
Gobblygook.
"Europe is now effectively in a triple-dip recession, with Q3 GDP for the Euro area at -0.2%."
will get worse before it gets better ... oh, did i mention US going down, as well?
They promissed to contribute some donnations to Kievan fascists as well.
Is the contribution of EUR17bn included in the 4cast?
Oh, thats why 10 years worth of annual production in silver has traded in 5 hours. There must be sooooo much supply.
ICSC - Goldman Sachs store sales index
at the beginning of october the month the year over year gain for month was to be +3.5% to +4.5% ... due to drop in gas and halloween falling on a friday (more party buying)
year over year for week ending
october 4th ... +3.9%
october 11th ... +3.8%
october 18th ... +2.1%
october 25th ... +2.8%
november 1st ... +1.8%
The only reason we are not in a recession in the US is the Fed's QE. And the Fed is now so inbred that even they do not realize that the reason we are not in a recession is because of QE. They actually want to believe the economy has recovered.
Morons.
Even with QE the only reason we are "not in a recession" is because the figures are falsified.
Don't those idiots in Europe (ie. Your Rope) know how to manipulate their GDP data? If the dipshits in Team Hussein can do it, the EU can too.
didn't the Europeans add prostitution and drug dealing to boost GDP? Still not enough? What can they add next? Suggestions to help out our european brothers? contract killings? Sicily's economy to the moon!
IT'S THE DEMAND, STUPID
I wonder whether disinsanctioning Russia will help extract the EU from Tripledippiea?
Good ole Putin still has the whole world in his hands.
Better not tell Amerikan Patriot.
Triple dip? Can't bring themselves to day depression, can they?
GDP growth is merely a reflection of oil wastage efforts.
No doubt there is a increase in car traffic in my city this past year but at the cost of a further erosion of basic purchasing power.
(Oil wasted in traffic jams cannot be used to purchase stuff.)
The euro seems to be the most extreme version of the bankers hamster wheel economy. "growth" always involves the creation of more useless assets (cars)
Its their perfect little Rosemary baby.
People can't seem to get it into their little heads that economic activity in the eurozone is extractive of their wealth.
Almost all of the high quality liquid fuel in Europe is used to chase scrarce money.
Until this problem created by bankers is overcome the society will continue to implode.
The USA's demands that Europe sanction Russia has put a world of hurt onto nations who need the Russian market. No, it's not huge, but it is growing and demanding more from Europe, especially Germany. Germany sells cars and engines, power plant turbines, heavy machinery, tools, and machine tools. Others sell specialty foods. Ukraine just lost it's largest customer in Russia. Other states farmers are being thrashed by Russia import food ban.
The EU is indeed in trouble. Taking one of your best paying customers and sanctioning them because the USA carried out a coup in Ukraine proves just how slavish and sold out the EU leaders are. The Europe economy loses Russia's 150 million person market, and the other BRICS are racing to ship what Russia want to buy.
Obama has fucked Europe up the ass, and they are asking for more! This is the price of having leaders of the EU "bought off" or "black mailed" " or threatened with an accident" by the US State department, NSA and CIA.
Nicely summarised Jack, in addition the pressures of having US bases scattered all over Europe, evidently in Germany puts more pressure on the political leaders to do the US bidding.
The only way out of this, is either a Civil uprising or a War in Europe because the Corporotocracy (attempting to overrule the political leaders) is not as powerful as the Banks and the MIC.
The euro-zone is in a far bigger mess than recent headlines and figures suggest. Most of the growth in the Euro-zone over recent years has been in Germany and that bright spot is now under pressure. Italy has been in recession for two years; France’s economy has been stagnant for months. Now that Germany is in trouble, many economist think the chances of a Japan-style deflationary spiral have risen sharply.
What it all boils down to is Germany can’t keep buying Greek bonds and other bad debt with German taxpayer money until the end of time. Nobody wants to write off the bad debt so they continue to create more. The article below looks at the corner Central banks have painted economies into by attempting to paper over reality and how these polices will hinders growth for as long as the eye can see.
http://brucewilds.blogspot.com/2014/10/global-economic-malaise-due-to-debt.html