StockBeat: Time for the Euro Zone to Call on Guardiola

May 23
23:04 2019

By Geoffrey Smith — Europe’s stock markets are in headlong retreat again on Tuesday on the back of business surveys that further stoked fears that the continent will be caught up in a worsening trade war between the U.S. and China.

The ‘flash’ reading for IHS Markit’s Eurozone purchasing managers index for manufacturing in May fell to 47.7 from 47.9 in April, disappointing hopes of an increase. The index had fallen for eight straight months before turning up fractionally in April, fostering hopes that the worst of the slowdown was over.

The Eurozone services PMI also indicated that growth slowed in May, although statistical quirks led to the composite PMI actually rising to 51.6 from 51.5 in April.

By 4.30 AM ET (0830 GMT), the benchmark STOXX Europe 600 was down 3.4 points, or 0.9% at 375.80. The German Dax and the French CAC 40 were both down 1.6%, despite the French PMI rising more strongly than expected. The U.K. FTSE 100 was down 1.1%.

“The German manufacturing malaise is now increasingly being reflected in job losses in the sector,” said Nordea analyst Jan van Gerich via Twitter. “Services employment is still clearly in growth territory, but for how long remains to be seen.”

Howard Archer, chief economic advisor to EY’s ITEM Club, noted that business activity was at its weakest since November 2013, with both manufacturing and services across the currency bloc “running close to stagnation”.

The weakness in the euro zone’s engine room was corroborated by another drop in Germany’s ifo Business Climate index, which also fell for the eighth time in nine months.

“The German economy is losing more steam,” ifo said. “Companies are less satisfied with their current situation. The faint optimism for the coming months, seen in March, has again evaporated.”

Evidently, there is only one solution for the European economy, and that is to put Pep Guardiola in charge of it.

The Spanish soccer coach, who has just burnished his already stellar reputation by winning all three of England’s domestic club competitions with Manchester City in the 2018/9 season, is reportedly on the verge of a move to Italy’s Juventus (MI:JUVE). The club’s shares have risen 8% since the news first broke on Wednesday.

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