A sign of how hard the energy crisis is hitting
The German ZEW business sentiment survey is one of the better high-frequency data points for Europe and today it sank to 22.3 from 26.5.
At this point we should be seeing sentiment ratchet higher but it's already back to mid-cycle levels -- and mid-cycle wasn't very strong in Europe.
The number emphasize how hard the supply chain woes and energy crisis are hitting German manufacturing. At the moment, those are still temporary problems but the timeline to straighten them out is extending. At the same time, costs are going up, eroding margins.
One of the relief valves is the currency and the fall in the euro will act as a bit of a buffer but with the euro already at the lows of the week and showing little signs of life despite the recent rout, there's likely more to give.
