Sentiment Better As German 'Confidence' Ignores Fundamentals, Tracks Stock Market, Rises

Tyler Durden's picture

Remember all those European PMIs which imploded over the past month, destroying any hopes of a rapid rebound from Europe's technical recession? You can forget them now because the one indicator which tracks the level of the manipulated stock market more than anything else, German IFO business survey, just came better than expected, at a whopping 109.8 compared to expectations of 109.6 print, same as the previous one. And that is all it takes for futures, and the EURUSD to ramp, which in turn plants the seeds for another confidence ramp next month and so on. Here is Goldman's take: "The assessment of current conditions remained unchanged at 117.4, while expectations increase to a level of 102.7 after 102.4. Looking at the different sectors it shows that confidence in the manufacturing sector was broadly stable on a high level (14.0 after 14.3), while construction saw a small decline after a surge over the last couple of months (2.3 after 3.3; confidence stood at -13.2 in October). Confidence in the retail sector also recorded a strong gain (106.6 after 3.7), while wholesale saw a decline (12.8 after 15.0). This is a strong report with business conditions remaining significantly above their long-term average of 101.1. The rebound in business conditions after a soft spot during October to January is indicative for a rebound in the underlying momentum in the economy." Well, no, if anything it is indactive that Germans were happy to reap the benefits of a few trillion in liquidity which in turn pushed markets higher, and making Germans even more confident despite the big miss in German PMI in March. But for now a big drop in the market is unwelcome so let's focus on reflexive, Catch 22 indicators. Even Goldman is perplexed on the spin: "Only the release of the 'hard' data in the coming weeks will show which survey is giving the correct signal with respect to the underlying momentum of the German economy. But in any case, the March IFO argues against taking, at least for now, the PMIs at face value."

Charting the IFO:

And here is a recap of overnight sentiment from BofA:

Market action

The regional MSCI Asia Pacific Index slid 0.6%, marking the second day in a row the index finished lower, as concerns build that exporters will post weaker earnings results in the months ahead. In addition, investors are worried that Chinese banks have understated the risks of loans to local governments. Starting with the worst performers, the Indian Sensex dropped 1.8% while the Korean Kospi shed 0.4%. The Hang Seng finished flat while the Shanghai Composite and the Japanese Nikkei both managed to finish up 0.1%.

In Europe, equities are trading 0.3% higher in the aggregate. The region's blue chips are flat while shares listed in London are up 0.4%, German shares are inline with the broader regional aggregate up 0.3% and French listed firms are trading flat. At home, futures are pointing to a modestly higher opening later today. The S&P 500 is set to open up 0.2%.

In bondland, Treasuries are selling off across the curve with the 5, 10, and 30-year yields all 3bp higher. The 10-year yield is currently trading at 3bp to 2.26%. In Europe, yields on the safest European bonds are selling off while peripheral debt is rallying. The Italian 10-year yield is 5bp lower at 4.97% and the Spanish 10-year is 7bp lower at 5.26%.

In the currency markets, the dollar is strengthening against a basket of other major currencies. The DXY index is up 0.3%. That is helping push commodity prices lower. Gold is down $1.21 an ounce to $1,660.87 while WTI crude oil is 46 cents lower to $106.44.

Overseas data wrap-up

The German IFO survey was a touch stronger than expected in March, showing a slight overall pick-up over the month. Current conditions were unchanged at 117.4, though that was above market expectations of a decline to 117.0. But the Business Climate index rose from 109.6 to 109.8 (market 109.6): the 5 consecutive increase, to its highest since July last year. Similarly, expectations also picked up over the month - from 102.4 to 102.7 (market 102.6) - again the five consecutive monthly rise to the highest since July last year. While survey indicators (ie the PMIs) of the state of the German manufacturing industry are very mixed at present, all are consistent with German GDP expanding moderately in the first quarter.

Italian consumer confidence unexpectedly rose to 96.8 in March up from 94.4 in February. The market was looking for a decline in consumer confidence to 93.5. In our view, the improvement in the index is not the start of a new trend but rather signals that consumer confidence is stabilizing around the current level. With the economy set to slide further into recession this year, we think consumer confidence will likely stay at the current depressed level or even fall further.

The week's events

The data calendar will be relatively light. Wednesday's durable goods report will likely be significant. We are expecting orders to advance 4.0% on the back of a sharp increase in Boeing orders. Stripping out transportation, durable goods orders are expected to rise 2.0%. On the other hand, the policy calendar heats up as we hear from a bevy of Fed speakers, including the "core" of the FOMC: Chairman Bernanke and NY Fed President Dudley. We think there speeches may provide their latest views on the economic, inflation and policy outlooks.

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Mister Ponzi's picture

Don't forget: This index evaluates the answers of German companies. These companies have done a tremendous job diversifying into Eastern Europe and Asia. Therefore, some studies argue that the Ifo index no longer measures German business sentiment but due to the globalization of the companies is now an index of the sentiment in the global economy. The reading has to be interpreted accordingly.

Dick Darlington's picture

Irish housing market plunge accelerating despite the increasing false hopium dosage.

     March 26 (Bloomberg) -- Following is a summary of the February
residential property prices report from Central Statistics Office in Dublin:
                           Feb.   Jan.   Dec.   Nov.   Oct.  Sept.   Aug.   July
                           2012   2012   2011   2011   2011   2011   2011   2011
All Residental Property    66.1   67.6   68.9   70.1   71.2   72.8   73.9   75.1
 MoM                      -2.2%  -1.9%  -1.7%  -1.5%  -2.2%  -1.5%  -1.6%  -0.8%
 YoY                     -17.8% -17.4% -16.7% -15.6% -15.1% -14.3% -13.9% -12.5%
Note: Base January 2005 = 100

Boilermaker's picture

Ah...yes, the power of surveys.

Chaffinch's picture

Might it be the warm dry spell which has affected their confidence by such an amazing amount? ; )

TruthInSunshine's picture

Grün Sprösslinge©, baby!

*Grün Sprösslinge is an official copyright of The House of The Red Shield.  *The Rothschild Group, New Court, St. Swithin's Lane London, EC4N 8AL. Specializing in Debasement of the human soul from infinity to beyond, since 1744.

Maxisaxon's picture

I read what TD reported here. But here is a fact not to be overlooked. "Handelsblatt" reports this morning that the the net export of jobs out Germany seems to have reversed. The 30 DAX companies in 2011 employed 16.000 more people than the year before and this trend seems to be a continuing one. The actual economy Germany, not just the stock market is booming. It is important to separate fact from opinion. 

gatorengineer's picture

Wow 16,000 jobs year over year......  thats the kind of boom Barry would be proud of.....

ivars's picture

Comparison with Armstrong USA default predictions :

Gold is a good investment NOT because of all the fiat nonsense, but because inflation has passed it by and there will be a huge burst of price movement. That will come when the Sovereign Debt Crisis hits the USA and that does not seem likely until 2015.75.

My chart shows that the USA will partially default (crash in debt amount)  when the debt reaches about 21 trillion which should happen in the end of 2015-beginning of 2016, given its superexponential growth.

From my charts, the Gold prices will start to anticipate this default much earlier, seriously already in the end of 2014. After default, Gold shoots up 5500 USD/oz to 11500 USD/oz in 1 year, and then sometime in 2017 the Gold bubble ends. Why I do not know, as chart are in USD as they are today.  Might also a point of  change of regime I have no idea about.

However, the first doubling of gold in value according to my charts from around 2000 USD to 4000 USD in a form of panic buying will happen immediately after 2012 elections and by the middle of 2013,  which may mean that QE3 or some significant fiscal stimulus will be delayed until elections and than IF Obama wins second term , it will be unleashed after this delay, so in bigger scale than anticipated. Or may be whoever wins, since its FED who decides on printing.


Martin W's picture

Deutschland uber alles !! .....up to the final kaput

Olympia's picture


Due to the German behaviour, Europe has become the “bedroom” where Jewish loan sharks rape the Europeans. The first time, they have served the Americans at the expense of the Europeans and the second time round they serve the Asian Jews at the expense of the European people again. It is because of them that in 1945 the American occupation of Europe started and in 2012 –again it is them to blame- the Jewish occupation begins …An occupation that did not come out of the blue but it was the result of a war attack. In 1989, Jew Greenspan levelled his “assault” against both USA and Europe from his position in FED …the cheap money “assault”, the result of which is now obvious. Cheap money destroyed the productivity of the western countries and forced them into unemployment. Peoples without employment got involved in huge debts and now, loan sharks are infesting their countries.

This is a game Jews couldn’t have played without the help of Germany …Without the first “willing” player. It is again because of stupid and unnecessary financing that Germany “fell into the trap” and turned again against Europe …the play is same, only this time it has different “bosses”. In the Second World War, Germany was financed by the American to start a world war that was a lost cause right from the start. It destroyed everything and at the same time it brought its American lenders to Europe. Today, something similar is happening. It got financed again by the FED that belonged to the Jew Greenspan to bring Europe to his countrymen loan sharks. The Jews by knowing Germany’s needs and complexes, they could play with them. This is why they put Germany in the adventure of reunification …the adventure of the so-called national “engagement” which was diligently made even more expensive. What for? …To finance it …To force the unified now Germany into unbelievable debts. Why did they over-indebt Germany? …to leave it with just one “way” of salvation.

…Germany betrayed Europe once again. Germany handed all the European countries over to the Jewish loan sharks, by naively believing that this way they would let Germany free. Germany put the European family at the “target” of the “markets” and it is collecting profits every time one of its members gets “executed”. The loan sharks who pretend to be the “hunters” are shooting safely in the European “hen house” because Germany has managed to “raise walls around” Europe. One after the other, Europeans are destroyed so that Merkel can pay the stupid and artificial German debts to the loan sharks.

Germany, the DISGRACE of Europe

Authored by Panagiotis TRAIANOU


Sophist Economicus's picture

Interesting stuff.   Here is some unsolicited advise:   Eat less raw meat, more vegetables.   Take more frequent walks to improve blood flow to brain.

Maxisaxon's picture

What unmitigated rubbish.

cnhedge's picture

wait for bernanke to talk about the interest rate expectations.

Dead Canary's picture

This just out: According to the BLS, to the politician economic confidence index was up 17% for the month of February. That makes 63 months in a row that politicians were optimistic about the recovery.

Vince Clortho's picture

We are truly living in a golden age.  All you need do is believe the monthly release of contrived statistics released by your debt masters.

Dead Canary's picture

The Guardian: "News in from Athens where our correspondent Helena Smith says officials, awaiting the return of international monitors, are heaving a sigh of relief that anti-austerity protestors failed to mar the country's independence day celebrations over the weekend."

Wow. A day in Athens without riots.Just keeps getting better and better.

carambar's picture

I love the title "Sentiment Better As German 'Confidence' Ignores Fundamentals"

 Tyler from his windowless office claims he knows better than the IFO.

Reminder:   The Ifo Business Climate Index is based on ca. 7,000 monthly survey responses of firms in manufacturing, construction, wholesaling and retailing.

what's next Tyler.


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