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The
Letter
Where We Are
The economy is weak and is
expected to weaken further.
This is what the market is
saying via extreme weakness in
the automobile sector, the
steels and many chemical
stocks. A rally in the euro
looms larger than ever and this
may support domestically
oriented companies through
lower import prices. The
German economy needs an
export surplus of ca. 220
billion euros annually to
produce about 1.5pc growth.
The German export business
largely rests on three markets
and the vulnerability to a firm
euro plus problems in France
is huge. That said, the risk is
that Germany will itself in a
severe recession sooner than
the consensus expects. - The
DAX is now heading for a test
of the August lows. Ideally, it
should drop below 9,300 on
bullish divergences in our
short-term technical indicators.
Seeing is believing, though.
Stocks
You are out. Stand aside.
Bonds
You are long. Set a stop at
BUND Future 149,.
Copyright Advice & Opinion, 2015
actually shrink.