Reasons to be worried about Europe.

Reasons to be worried about Europe. Europe appears set to disappoint in terms of growth, trailing behind the US and emerging markets. Last week we saw disappointing data out of Germany, and this week the region’s 4Q GDP reports could confirm that a slowdown is already underway. Our favorite proprietary models tracking the euro area business cycle show clear signs of deceleration in manufacturing and overall GDP growth. A plunge in December industrial production creates a very weak entry point into 2010, suggesting that our below-consensus forecast of 1.2% for the year may need to come down. The ongoing recovery thus remains very much “triple-B” (bumpy, below-par, and brittle).