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Ignore That Recession. German Investor Confidence Hits Six-Month High Amid Best DAX Rally In 18 Months

"Growing hope".

Signs of investor optimism are everywhere – hell, the outlook is even brightening in Germany, where data due later this week may show the world’s fourth largest economy sank into a technical recession in Q3.

ZEW investor expectations jumped to minus 2.1 for November, the highest in six months, data out Tuesday showed. ZEW President Achim Wambach cheered “growing hope that the international economic policy environment will improve in the near future”.

Last month, the gauge sat at -22.8 and economists were looking for minus 13 in November. Readings for current conditions moved higher as well.

The improvement in investor confidence is in line with the DAX, which is on track for a sixth consecutive weekly gain. It’s the best streak since May of 2018.

The index is up nearly 26% in 2019, coming off the worst year for German equities since the crisis.

Despite the optimism, Germany’s manufacturing slump is deeply entrenched. Data out earlier this month showed that factory orders, while jumping more than expected in September from the previous month, still fell 5.4% from a year earlier. It was the 16th consecutive decline.

The manufacturing PMI is mired in a heinous slump. The improvement in the final read for October (versus the flash print) is just a blip.

And yet, speculation that the tide is turning is rampant. Indeed, the DAX has been at the forefront of the pro-cyclical rotation across markets and news that Donald Trump is likely to delay a decision on auto tariffs for another six months certainly helps.

The DAX has now spent seven sessions in overbought territory.

Read more: Who Needs An Economy When You’ve Got Stocks? Markets On Fire In Two Recession-Hit Locales

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