A cold ( economic ) Summer

As expectations of Powell’s speech at the Jackson Hole symposium and Nvidia’s consensus beating results make the headlines, there is little discussion on the worsening economic environment in Europe. The Eurozone composite PMI, the most important economic leading indicator, is now in contraction territory ( below 50 ). This is not only driven by the manufacturing side, but also by the service component. On country level, German activity dropped by the fastest pace since the first wave of the pandemic. While the good news is that the ECB will consider this data point in their next interest rate decision and be less inclined to continue to raise rates aggressively, a cold economic Summer spells trouble for the Q3 company result season.