- Triple whammy from Asian rebalancing, US economy and bad energy policy
- Economic deceleration is too quick for comfort
- Unlike its footballers, Germany became complacent
By Steen Jakobsen
We need to congratulate Germany on its World Cup win. It was a victory for organisation and science, but unfortunately the Germany economy is slowing fast — and too fast for comfort when we look at Eurozone GDP.
I have long argued this slowdown was coming based on Asia rebalancing (reducing imports of capital goods and turning more domestically-based); Bad energy policy (being dependent on Putin and his Russian gas rather than German nuclear energy — not exactly perfect substitution); A new minimum wage and a coalition government that has either reversed or halted a lot of the progress that had been made in the labour market.
Unlike its football team, Germany became complacent and the switch to a reliance on green energy is now at risk as growth collapses.
A few charts to illustrate my old argument ...
This confirms that we are destined for new lows in yields in core Europe, something I have constantly said since Q4-2013. The world is barely producing growth with zero interest rates — how can ANYONE believe rates will go higher? Beats me!
Therefore: Long IEF, Bund futures and 10-year US Treasury notes.
Congrats with the World Cup boys, but your economy? Oh dear.
Photo: Wikimedia Commons/Agência Brasil
— Edited by Clare MacCarthy