An excellent piece from @JeffSnider_AIP on the situation in Europe👇. I have just two additions.
1) We should be very clear, where the growth of Europe, which has been relying more and more on exports as the engine of growth since 2008, has came from. 1/
The source, quite simply, has been #China .
Below you find the long series of leading indicators of the OECD. They show, quite vividly, that China has been "leading the show" with the lag of around 3 months.
It's notable that after the record stimulus of China in Q1,... 2/
The recovery in Europe has been nascent.
This gave a direct hint that the effectiveness of #China stimu has faded considerably, and that same can be expected from the record stimulus through the 'shadow banking' sector in Q3. 3/
2) European banking sector is in a very bad place. The catastrophic decision of the #ECB to restart asset purchases and push interest rates even more to negative, will wreak havoc in continent's banks.
More on those issues here. 👇4/
We've explained the problems of the European banking sector in more detail in our newest Q-Review. 👇
While economic growth is slowing, basically, everywhere, Europe is to be watched closely, because... 5/
The banking sector is unable to cope with another #recession.
European banking union is underfunded and incomplete. EZ countries are more indebted than ever.
Europe, quite simply, has the potential to light the global banking sector ablaze. /end
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