An interesting Tuesday - charts and thoughts from Asia and Europe

A week of different timings kicks off with a range of slightly mixed data and events from Asia and Europe over the last 12 hours or so.

The most striking chart comes from - supposedly - Europe's strongest economy Germany where (as ‏@David_Scutt points out):

'German ZEW expectations have fallen for 9-consecutive months, the 3rd-longest streak in the history of the survey (Feb 2000-Mar 2001)'

It does not make a pretty chart.  Will the euro zone move explicitly to full QE over the next 6 months?  I think the economic logic is very clear.  

Continuing on Europe I liked this article on the current lack of barriers to a lower euro which concluded that:

'...the euro's fall to date is only 5 percent on a trade-weighted basis. So any red line is far off in the future'

I am not sure I totally agree with this BUT at the moment the scope for looser policy generally remains.  European policy-makers should use it.  

I noted yesterday (link here) rising fears of a Chinese slowdown (although a capability too for the Chinese authorities to help offset this particularly through ongoing microeconomic reform) but back to Japan today with a surprising (slightly arrogant?) observation that:

'Bank of Japan Governor Haruhiko Kuroda told business leaders in Osaka that the central bank's monetary easing programme is exerting "its intended effects" and said the Japanese economy "has thus been on a path suggesting that the 2 percent price stability target will be achieved as expected."'

I have been vocally cautious/critical of the recent Japanese economic trend over recent months and it feels to me that the confidence quoted above is badly mis-placed.  I keep on looking at the signalling of the yen with that 10 year 'high' (from a US dollar perspective) to aim for...

Finally an interesting fact from Fast FT which noted:

'Emerging markets are heading for their ninth straight day of losses, the longest streak of declines since September 2001, as nervousness over the possibility of US rate hikes and slower Chinese growth mount...The gauge has only slid for 10 consecutive days once in its two-decade history - in August 1998, when a profound crisis across the developing world led to the default of Russia and a host of Asian countries...Emerging stock markets have still enjoyed reasonable returns this year, with the FTSE index up 6.7 per cent...'

Fear and greed in the emerging markets...yesterday SABMiller spiked up on consolidation hopes primarily due to their emerging market exposure and I noted last week some 'out-of-favour' Russia opportunities.  Let's not forget the chart below I highlighted yesterday:

The key is to use volatility - which is pushing up a little from YTD lows - as your friend.  Judging by some of the stories above this is going to continue into 2015