Macro-News round-up:

In the Euro Area, producer price inflation PPI dropped from -0.30% in November 2023 to -0.80% in December. The risks of deflation are getting louder and louder. This is one of those things we are anticipating weeks or even months in advance. If we finally enter a deflationary environment, for readers of this report, it will not come as a great surprise.

We have also been mentioning for a couple of weeks now the possibility of a fall in global demand, given the low upward response of crude oil to the events in the Middle East. Well, German data appears to point in the same direction, confirming our diagnosis.

Germany: The sluggish worldwide demand in December caused German exports to decline more than anticipated, according to figures released on Monday by the federal statistics agency.

In December, exports decreased by 4.6% from the previous year. The outcome contrasted with a 2.0% decline predicted in a Reuters survey.

According to the office, exports to EU nations decreased by 5.5% from the previous month, while exports to non-EU nations decreased by 3.5%.

Please, remember, In the fourth quarter, the GDP shrank by 0.3% from the previous quarter, causing experts to issue a recession warning.

China: State-sponsored purchasing probably lifted Chinese stocks from multi-year lows for the second day in a row. Investors are sceptical that the support will endure and caution that it will leave markets unstable and out of balance.

As long as the real estate industry continues to be fragile and a burden on investor and consumer confidence, financial support of the market cannot be maintained and will not result in a long-term turnaround. Given the value of mainland stocks—which approach $9 trillion—the effort is enormous.

More than $17 billion was tracked into blue-chip funds by S&P Global Market Intelligence last month, but the fundamental growth issue is still unresolved.

The impact of domestic purchases was disputed in 2015 because to the far more favourable economic environment. In any event, it took months for the markets to reach a bottom and more than five years for the blue-chip CSI300 to return to its peak.

By the way, what guarantee do we have that this is not what is happening in Europe’s bullish stock markets? Despite increasingly poor macroeconomic data and being mired in recession, their stock markets seem to be magically rising.