The FTSE 100 took a breather today, after the sharp rise on Friday, as did the eurostoxx 300, giving economists the chance to reflect on the latest euro area sentiment data. Germany ‘s institute for economic research reported its findings for November. The IFO survey, as it is known, reports on business climate, conditions and outlook, and is conducted from most industry groups. The survey came in slightly better than expected today for all three categories. After several months of weakening sentiment this may be a small piece of encouragement for those looking for signs of some improvement in the economic outlook for the broader eurozone economy.
Once again the tensions between the wishes of Germany’s Bundesbank and the ECB were reignited on Monday as the Bundesbank’s President Jens Weidmann raised the ongoing question as to the legality of the ECB buying government bonds in the open market. This is an ongoing battle and why we think that the ECB will look to exhaust all other measures before attempting to seek approval for full-blown quantative easing in the mold of the US.
Europe may remain in the headlines on Tuesday as Greek officials meet with combined representatives from the ECB, the IMF and the European Commission, otherwise known by the Russian word Troika. The meeting is being called to discuss Greece’s latest budget proposals given to the Greek Parliament at the weekend, but not approved by the Troika. As has been the case over the past few years a game of chicken will be played between the two sides and a compromise will be found, but it may make few headlines in the meantime.
Later on Tuesday sees the final reading for Germany’s Q3 GDP; expectations are for a small downgrade from the initial figure of 0.1% to minus 0.1%.
Also later on Tuesday we get the second estimate for US Growth in the third quarter. After the second quarter’s strong growth figure of 4.6%, expectations are for a more modest figure of 3.3%.