The Germans Are ‘Euphoric’ And Christian Gives You A Good ‘Poking’

Well, German equities are breathing a heavy sigh of relief on Tuesday.

After two straight days of declines (Friday was the worst day the year for the DAX) occasioned by jitters about automaker collusion, a worsening diplomatic spat with Turkey, and a surging euro (all things that bode poorly for exporters), the latest Ifo business climate print was fantastic:

IFO

(BBG)

That’s a record right there. Here’s the full breakdown:

  • IFO JULY GERMAN BUSINESS CONFIDENCE INDEX AT 116.0; EST. 114.9
  • IFO JULY GERMAN CURRENT ASSESSMENT INDEX AT 125.4; EST. 123.8
  • IFO JULY GERMAN EXPECTATIONS INDEX AT 107.3; EST. 106.5

“Sentiment among German businesses is euphoric,” Ifo President Clemens Fuest said in a statement. “Germany’s economy is powering ahead.”

Got it.

That helped European shares recover from a lackluster two-day stretch:

Euro

Meanwhile, Goldman’s Christian Mueller-Glissmann (who writes some pretty good stuff) sat down for an interview with Bloomberg and weighed in on whether the stronger euro will dent European equities.

“It’s possible that the strong euro weighs on the export side, but as long as global growth is solid, that’s the more important factor,” he said, adding that “this whole idea about a higher euro being bad for exporters has quite a few things you can poke at.

Ok, so if you’re in the camp that thinks the stronger euro is going to undercut the bull case for European equities, just know that you are vulnerable to a good “poking” from Christian.

But “poking” or no “poking”, you should still be cognizant of the following chart which quite clearly shows that the surging currency is starting to weigh:

EurEurostoxx

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