The chart of ASR (Absolute Strategy Research) shows we are probably a bit too pessimistic about the growth in the Eurozone outside the war zone of the PIGS. The IFO in Germany told a completely different story than we hear every day, namely that it is crisis and that will be the case the rest of the year (at least). Also Scandinavia surprises positively (again) and in the UK the current affairs are not more depressing than initially thought. It is to hope that will also apply for France and the Netherlands. In the Netherlands the real estate market is too bad to let consumer confidence improve meaningfully while income growth is dreadful. It is too difficult to compensate this with better exports. In Germany things are rosier: the housing market is clearly recovering, the confidence is still high, the unions will get a nice rise of the wages and the lower euro will help exports. This is not yet visible in better growth of the industrial production and retail sales but you can hope on improvement coming. So it is not that strange that the DAX is doing so well in the last weeks.
In the US it looked like the surprise indices had topped, but unexpectedly they came back at the old tops. The surprises refuse to vanish, we seem to need more patience (a few months?) before economists have drowned their black poison with excessive QE abuse.
In the Pacific the surprises disappoint. That is amazing, because we hear every day that things are going so well and that growth will not be that vulnerable for low growth in the West because they are selling more and more toe ach other in Asia. The growth in china seems to disappoint a bit more than previously thought. We have had the warnings: declining house prices, overspeculation in Wenzhou but especially clearly lower demand from steel and electricity than thought. The growth of China can drop to 7.5%, also because infrastructure spending is slowing and investments in real estate ought to soften also.
Great readingg this
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