German ZEW indicator hits two-year low

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Hot off the press, the German ZEW Indicator of Sentiment dropped to -5.9 in June from 13.6 in May, whereas the euro zone economic sentiment index fell to -9 from 3.1.

These measures show investor confidence in both Germany and the euro zone at the lowest level in over two years.

“Investor confidence will remain under pressure in the coming months amid ongoing concern about the European debt crisis, and as fiscal consolidation throughout the region, higher official interest rates, and elevated crude oil prices weigh on economic activity,” said Moody’s Analytics – Dismal Scientist.

Source: Moody’s Analytics – Dismal Scientist, June 21, 2011.

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Matt Taibbi: The People vs Goldman Sachs

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Rolling Stone’s Matt Taibbi joins Thom Hartmann on The People vs. Goldman Sachs. A Senate committee has laid out the evidence. Now, Taibbi argues, the Justice Department should bring criminal charges.

Source: YouTube, May 13, 2011.

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German IFO: What slowdown?

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German business confidence improved strongly in July, taking economists by surprise. The business expectations, current situation and business climate indices are all approaching the highs last seen at the start of 2007. The improvement was broad based except for the construction industry. Of particular interest is that business sentiment in the retailing industry has turned positive for the first time since February 2008 while sentiment in the wholesale industry has improved markedly.

Sources: Dismal Scientist; Plexus Asset Management.

The significant improvement in the euro zone’s largest economy is sure to rub off on the entire economic region. The IFO Business Expectations Index leads the GDP-weighted PMI (manufacturing and services) of the euro zone by approximately one month. The strong Business Expectations Index number for July therefore suggests that the GDP-weighted PMI in August should be strong as well – on top of that of the flash estimates for July that surprised analysts and commentators on the upside.

Sources: Dismal Scientist; Plexus; Markit.

The numbers should continue to be supportive of European equity prices.

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