U.K. CEO Warns of ‘Corrugated Bottom’ for Economy; France Signs Deal for Exports to China
U.K. CEO Warns of “Corrugated Bottom” (CNBC)
European investors looking for good news can rule out the United Kingdom, even though the country avoided igniting a triple-dip recession this month. By recording .3 percent economic growth in the last month instead of analysts’ expectations of .1 percent, the United Kingdom was able to dodge the literal definition of another recession — which would have been their third in two years. But according to Martin Sorrell, CEO of WWP (the world’s largest advertising group), this narrow escape shouldn’t be taken as a positive portend for the economy. Instead, Sorrell claimed, “… There’s no doubt we’re bumping along… a corrugated bottom: it has its ups and downs.” He pointed to the government missing its own targets for deficit reduction and the lack of trust in England’s austerity measures as evidence. So, the question remains for investors, is one CEO’s opinion more correct than the British government’s spin?
French President Signs up China for Two-Thirds of its Largest Exports (YahooFinance)
Elsewhere in the European Union, France is hoping that China’s new-found appetite for “nouveau-riche” products will work to its economic favor. During his two-day visit to China, French President Francois Hollande already has cut deals with the Chinese for two out of the three major exports from France: jets made by Airbus and nuclear power plants. All that remains is for him to cut a deal for French cheese and wine. In recent years, Chinese citizens gaining in affluence and disposable income have become bigger purchasers of French luxury products like aged cheeses and fine wines. In the last five years alone, Chinese consumption of French cheese is up 340 percent, and 33 percent for French champagne. Right now, China accounts for just over 1 percent of France’s foreign trade. The French government is hoping to increase exports to China significantly in the near future.
After Rollercoaster Week, Far Eastern & European Markets End Lower (Bloomberg)
Given the mixed performance for U.S. companies to meet analysts’ expectations, investors worldwide seem to be waiting on the first quarter Gross Domestic Product (GDP) results from America before making a concerted move in the markets. This situation has led to mixed results for the past five trading sessions. European markets are ending the week with red numbers: England’s FTSE 100 is down .51 percent, the EURO STOXX 50 lost .86 percent and Germany’s DAX went underwater by .33 percent. In East Asian markets, the trend wasn’t so nearly clear cut with Japan’s Nikkei down .30 percent, Hong Kong’s Hang Seng up .65 percent and Shanghai’s Shenzhen 300 Index down .83 percent.