For Germany, The Four Year Business Cycle Is Complete

Tyler Durden's picture

Next week will see a slew of key data releases across the Euro area. The week will kick off with the German Ifo for August due on Monday which Goldman expects to fall slightly, reflecting the softening in the August composite PMI.  The business climate index has been signalling a further loss of momentum in the German economy, with both key dimensions - the assessment of current conditions and business expectations - deteriorating since May. The chart below shows how both components have evolved during the European debt crisis. The 'expectations' component appears to have been particularly affected by European developments. As far as the sectoral breakdown is concerned, the Ifo was still signalling rather robust domestic growth in construction, and in retail and wholesale goods, while the manufacturing sector seemed to have been adversely impacted by a weakening in external demand. The 'flash' reading of the August manufacturing PMI for Germany, however, seems to indicate that this could be changing. As the chart indicates, between the survey's mediocre perspective of the current situation and its negative expectations for the future - we have completed the circle and stand back at precarious Mid 2008 levels - and we know what came next.

German IFO - charting current situation (y-axis) against futures expectations (x-axis) - shows we have almost completed the circle...


Chart: Goldman Sachs

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Precious's picture

If Goldman Sachs says its true, then it must be true.

Jlmadyson's picture

The circle of death.

Alea Iactaest's picture

It looks a lot like a certain Greek island I've got my eye on.

malikai's picture

Let me guess. What comes next is green shoots, right?

TwoJacks's picture

cool way to picture the business cycle, if that's what you're calling that

The Wizard of Oz's picture


Jason T's picture

circle, cycle, wave .. it's all the same shit.  Tis the language of the universe.

Linus2011's picture

Greece will be done in october

Alea Iactaest's picture

Did they all go to SBUX this morning? Or sleep in and miss the bell?

Tense INDIAN's picture

talking about cycles....can someone list the best books on Market Cycles.....

Dr. Engali's picture

Is that a formula one track?

Precious's picture

Watch out for the moat at the end of the first lap.

Temporalist's picture

Damn I just said that below...

Linus2011's picture


Is that the american "guvernment" protected mafia organization that wants to buy german stocks cheap saying they are overrated at PE ratios of 6?

stopido americanos always tend to believe that kind of propaganda.

None of that bullshit seems true especially not here in south germany. well i must be living in a different germany then.


ar01's picture

If I'm interpreting this graph correctly, it perfectly highlights the bullish-bias in finance. There are simply more points where expectations > actual observation. 

Temporalist's picture

That chart looks like the Nürburgring of Hell

GMan_'s picture

BTFD. :) Look at SPX today. It's going up like there's no f*cking tomorrow.

economicfreefall's picture

When I see anything with Goldman sucks on it, I know to stay as far away as possible before they slice and dice me into an OTC derivative and sell me a hundred times over to the same client.

mickeyman's picture

Past performance is no guarantee of future failure.