We would assume that tomorrow's ECB meeting will be the usual smug gloating by Draghi of how the market has turned around so exuberantly and implicitly that means all is well. While Willem Buiter just took that complacent perspective to task [7], we thought the following six simple charts of Good (well not terrible), Bad, and Ugly macro-economic data would simplify reality...
The Good (ish)
Well, it's a stretch to say that sub-50 PMIs are good but they have shown a turn-up in recent months. Also, the positivity enlightened by a rising EUR relative to the USD has been indicated by some as a 'good' thing - though obviously (as Mr. Hollande recently noted) not for all as exports hurt...
[8]
The Bad
The price of energy (in EUR) is high, very high, and wearing on spending and margins. This margin pressure is even more intensified as the region gets close to deflation in asset prices - not good... and sure enough, the EUR strength (that was apparently a good thing) is crushing export growth rapidly...
[9]
The Ugly
Domestic Demand and GDP growth is decidedly negative and while second derivatives are heralded as green shoots, they are most certainly not taking the euro-area out of recession any time soon. This is weighing increasingly on the population as consumers see their general economic situation and household financial situation as very weak over the next 12 months...
[10]
All-in-all, it seems, as we have seen elsewhere, that equity markets are pricing in a miracle as fundamentals reflect anything but. Though perhaps, the fact that European stocks and credit are now down in price on the year reflects an awakening to the solemn realities...
Source: BNP