Article / 15 July 2014 at 10:09 GMT

Germany may have won the World Cup, but its economy is cooling fast

Chief Economist & CIO / Saxo Bank
  • 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 ...

Source. Bloomberg and Saxo Bank

ZEW expectations

ZEW expectations

Industrial Production
Industrial Production


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.

World Cup

Congrats with the World Cup boys, but your economy? Oh dear.
Photo: Wikimedia Commons/Agência Brasil

— Edited by Clare MacCarthy

Steen Jakobsen is chief economist and CIO at Saxo Bank

Al Lindner Al Lindner
Yes the World Cup victory is a true indicator of a market/societal top!

"Angela the Cautious" is precisely the wrong leader to have in this situation!

The one positive step that could mitigate a lot of the headwinds Europe is encountering is the proposed Trans Atlantic Free Trade Agreement, but Merkel is running around the country demagoguing the phony "chlorine chicken" issue.

Europe's greatest deficit is the leadership void, I don't see any Ludwig Erhard's out there who are up to the challenge. Who will step up?


The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail