A more constructive 2013

  • Happy New Year to everybody! And it was indeed a promising start to the year, first and foremost for risky assets – which bodes well for our multi-month outlook of a looming "great asset reallocation". The data releases since the turn of the year were overall constructive for our guardedly optimistic 2013 macro view as well, also allowing the ECB (and the BoE) to remain on the sidelines at its meeting today. 
  • Next week's numerous industrial production reports will unfortunately continue to contain a lot of noise. So do not read too much into these figures, especially into that for the EMU to be released next Monday. We expect a meager plus for November, which is by no means able to offset the 4% decline over the previous two months. However, this should be followed by a convincing sustainable recovery from December onwards. 
  • This improvement would come too late to save 4Q12 – for which we see real EMU GDP having contracted 0.4%, with risks tilted to the downside. But it is in line with our forecast of economic stabilization starting this year, which is already implied by rising sentiment figures. Italy will lag the regional pattern by roughly one quarter. 
  • While the UK's industrial report should deliver the expected technical rebound tomorrow, the US headline number (out next Wednesday) will be dampened by poor utility results. But manufacturing should have advanced solidly again, thus supporting our expectation of an ongoing US recovery – driven by a rebound in housing and business spending. 
  • China’s 4Q12 GDP report to be published on Friday next week should confirm that the seven-quarter-long economic slowdown has run its course. We expect the economy to have grown by 7.6% yoy (3Q12: +7.4%). Recent sentiment as well as activity data suggest that a moderate recovery is under way, with domestic demand being the growth pillar.

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