NY Open: Retail revisions give dollar some gains
The dollar is on something of a streak, with today's revisions to the October US retail sales report giving it a boost despite slightly softer November numbers.
Head of Macro Analysis
Summary: As European consumer confidence wilts, more and more problems and being revealed across the Eurozone economy. The signals are not good and Germany is the most worrying flashpoint of the lot.
Chinese growth leads Eurozone growth momentum
However, there is something more than political risk, Germany’s surprising GDP drop and low credit generation behind the recent slowdown. A key driver may lie elsewhere…in China!
Below, we plot German IFO manufacturing and the Li Keqiang Index, which is a reliable indicator of China’s growth (chart 6). We notice very well that China’s growth momentum leads German IFO manufacturing. This is not surprising considering that Germany is one of the rare main European countries to enter massively the Chinese market. All the credit data since past May tend to confirm that China has decided to open the credit trap to offset the negative impact of the trade war. Nonetheless, the stimulus remains too limited, and even if it were not, it would take several months or even quarters before having a positive effect on the German economy.