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Expectations were set low for November’s pronouncements

Following the gloomy European economic data witnessed in October 2019 expectations were set low for November’s pronouncements. Indeed, the ECB set the stage for disappointments with their relatively gloomy update on economic and monetary developments in the Eurozone. The tenor of their report was one of an economy potentially stabilising but still at the mercy of global events. German GDP data reflected this tone well, narrowly avoiding recession with growth of only +0.1% in the third quarter. Whatever definition we wish to place on this data it is clear that the days of strong growth for the country’s exporters are absent and the next move is hard to determine. GDP as a measure is, however backward looking while scrutiny of European PMI’s does give some cause for optimism with most European countries showing an improvement in November. For example, German manufacturing, although weak and still signalling contraction, did show an improvement from 42.1 to 44.1 for the month. If such readings are to herald a stabilising European economy it will very much depend on events further afield, notably Brexit and the US/China trade spat. The former is currently on hold as we wait for the result of the upcoming UK General Election.

With polls currently indicating a majority for the incumbent Conservative party the outlook for a deal is positive. Although polls can of course be way off the mark sterling has been steadily strengthening with the FX market likely favouring such an outcome rather than the alternative of a Corbyn led government or even a disorderly coalition. Despite some positive mood music at the start of the month following a meeting between US Commerce Secretary Wilbur Ross and Chinese Premier Li Keqiang the US/China trade talks once again descended into uncertainty particularly when the US Senate proposed a bill supporting the Hong Kong protestors which was subsequently signed by President Trump. Once again come month end the situation is yet to be resolved although talks do appear to be on-going.