Europe Economy

European Unemployment


For those curious how the most devastation depression in the history of the Eurozone is “improving” some four years after the first Greek bailout, look no further than these charts.

For those who live in Spain and Greece – we know you have no job, but please ask your government to change not only the definition of GDP but also unemployment. After all that is the only way things will ever improve in your country.


Unemployment Eurozone 2014

Source: Zerohedge


The sad truth about Spain And Italy in one chart


The sad truth, as Bloomberg’s Niraj Shah notes, is that recession/depression has pushed Spanish and Italian GDP-per-capita below the EU average in purchasing power terms – just like Cyprus, Slovenia, and Greece


Spain has just breached the 27% unemployment level and in a similar situation is Italy. That reflects a GDP-per-capita below the EU average. And France?? Could be the next country to fall below the average, as we can see in our analysis recently.



Charts: Bloomberg


Back To 19th Century


Critical european countries suggest that Europe is going back to 19th Century. In regard to Growth Rates Long Conditions, Spain, Italy and France are as weak as they have been in over a century. 


As JPMorgan’s Michael Cembalest notes: At the present, European sovereign debt spreads have been across the board, Banks and businesses is still declining, and the cost of loans in Italy and Spain is higher than both real and nominal growth, it is going ti see how it will be recover from this one. The chart below is very clear about this story…



Charts: JPMorgan


The Global Stagflation



Bloomberg has ranked countries based on their risk of stagflation and the question is… Who is the winner or loser at the case?


As we have indicated in others occasion, the stagflation is a potencial and real event in the Eurozone. This economic phenomenon is based on the following methodology: First, the average real Gross Domestic Product and average Consumer Price Index was calculated for each country from 2012 to 2014. Then the Stagflation Score was determined by multiplying average real GDP by average CPI if the average real GDP was negative or by dividing average real GDP by average CPI if the average real GDP was positive.

And the winner/looser is:


Estanflacion en Europa



European divergence Way


The risk of a real divergence is coming. When even the so-called ‘core’ nations are diverging aggressively in their macro-conditions, we make a big question (once again): Is it possible to hold a single and only monetary policy?? The difference is in many ways, and all of this is summed up perfectly in the ‘Taylor Rule’

Taylor rule is a monetary-policy rule that stipulates how much the central bank should change the nominal interest rate in response to changes in inflation, output, or other economic conditions. In particular, the rule stipulates that for each one-percent increase in inflation, the central bank should raise the nominal interest rate by more than one percentage point. This aspect of the rule is often called the Taylor principle.

The market, as repressed as it ever was, is starting to wake up to this divergence with France 10Y yields at their widest relative to Germany in 2013 today. The divergence was just as wide in 2005 and now is done:




Europe’s Car Market


European car registrations had their worst January on record – an 8.7% year-over-year decline – as consumers hit by austerity are likely to continue to limit spending on big-ticket items. The Association of European Automakers notes the 918,280 new cars (‘tagging’ aside) is the slowest January since 1990 and makes the 16th consecutive month of year-over-year drops.

The weakness is broad based with Ford (a record 26% plunge), Peugeot Citron (down 16%) and Toyota (down 16%) as it seems the hopes and dreams of a troughing in the European economy has absolutely not shown up in the car industry. As Reuters reports, citing a CS analyst, “Hopes of an earnings and cash recovery in the second half are misplaced.”


Vehiculos UE-PIB


European Car Registrations are down YoY 16 months in a row (lower pane) and fell to the lowest January in record (upper pane)…




Source: ACEA


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