Happy New 2025 Year!

December 28, 2024 – January 3, 2025

Big news. Another holiday week and the New Year fell in the middle of it, so no fundamental data on the results of December appeared. We leave some interesting moments for the last section of the Review.

It should be taken into account that there is an unusually large amount of political news. In particular, a series of terrorist attacks in the USA. We do not comment on them, they have nothing to do with macroeconomics. But their number clearly indicates an active political life, which will inevitably affect the economy in the coming weeks. So we wait.

Macroeconomics. PMI (expert index of the state of the industry; its value below 50 means stagnation and decline) of the French industry is 41.9. Not counting the period of the Covid quarantine, this is the bottom since the spring of 2009:

Chicago PMI in the US is in depression zone (36.9) and close to the May 15-year low (35.4):

US Mortgage Applications -12.6% Weekly, 3rd straight negative and worst performance since October (when a 9-year low of -17.0% occurred, not counting the Covid dip):

What is the reason for the interest rate on loans (6.97%), which is growing again (it has a six-month peak):

Against the backdrop of the rate cut, we note that this effectively means that the market believes that the risks to the mortgage market have increased significantly.

UK house prices according to Nationwide +0.7% per month, 4th plus in a row:

And +4.3% per year, the fastest growth in more than 2 years:

The price level itself has returned to the peaks of 2022:

This is against the backdrop of a decline in the standard of living of the population. In fact, this indicates the return of real inflation processes.

The number of unemployed in Germany has been growing monthly for 24 months in a row:

Having reached a maximum in more than 10 years (not counting Covid, whose peaks, however, are already nearby):

And the unemployment rate is at its highest since spring 2016:

Well, to see what life is like for the “middle” class in Germany, see the third section of the Review.

Main conclusions. General processes of structural decline in the global economy continue. To describe the scale of inflation processes in the USA, we will provide a comparative picture of prices at McDonald’s:

And to assess the stock bubble, we will provide a graph of the capitalization of the 10 largest companies against the background of the capitalization of the S&P500 market as a whole:

As we can see, the record figures of 1929 have been reached. Which, of course, does not formally mean anything, but it does make you think.

But this is the USA. We will illustrate the picture in the European Union with an analysis given by one of the participants in the chat of Mikhail Khazin’s closed channel in Telegram ( https://t.me/hazinOpen ):

“I’ll give you an example from my own experience: in Munich, the price of a new apartment of 38 square meters in a normal area in a new building will be about 700 thousand Euros (in the Schwabing area). The average salary in Bavaria is about 4000 Euros. The tax is about 35-40% of the salary. It’s funny that the tax on the bonus is 42%. Do you think you can afford housing? Especially for a young person after university? If you have 2400 Euros left and also rent housing, it will be about 1500 Euros. Given that the prices for everything there are higher than in Moscow? Therefore, fairy tales about the poor in Russia and the rich there in Europe can be left.

And there is nothing to say about Spain and Portugal. I recently read statistics, only 20% of the population in Europe can afford an electric toothbrush, and the remaining 80% cannot…”

Then: “For those who are interested in housing prices in Germany and how much and for how long you need to pay, there are 2 examples from Instagram. The first example is in Russian:

https://www.instagram.com/reel/C5xfkXWsQ0u/?igsh=NzVseDByOWttcWN3

if the rate is only 1% (now you’ll be lucky if they give you 8%) you need to pay 43 years at 2500 Euros/month. For a one-room apartment of 38 square meters with an apartment price of 699,000 Euros in Munich in the Schwabing area (can be compared with the Moscow district of St. Petersburg) nothing special, just a good area overall.

But in Germany there is one rule: the payment cannot be higher than 30% of your income per month!!

This means that it is not a fact that you will be given a mortgage, even if you find a shack for 300 thousand somewhere 60-100 km from Munich. It all depends on your income. But people do not receive fabulous money there. Housing is simply made inaccessible to people.

…

Currently in Munich, prices range from 1,300 to 2,000 euros (maybe without a kitchen and furniture at all, that is, bare). I think the price of this will be 1,700 euros per month in total. But it is unclear whether there will be furniture, a washing machine, etc. “

And continued: “Therefore, if we make comparisons, then only if we know the real situation on the ground.

Is it possible not to say that they will not let you earn extra money there??? When you deposit your hard-earned money into an ATM card, a warning appears that the money will be monitored due to the law on corruption, etc.? And if anything, the tax office will leave you without panties. For example, if you forget to pay the tax on a TV or a church, all your accounts will be blocked without saying a word.

I paid almost 700 Euros for electricity in a year. I live alone and only have a laptop, a couple of lamps in the house and a boiler (there is no hot water in the house) on. I don’t cook in an electric oven. And for heating, it’s even more than that in a year.

My colleague with 2 children in Germany can’t afford to fly on vacation to Turkey or Greece.”

This is the situation practically all over Western Europe (considering that Germany is considered a rich country there. Really, how can you compare… However, our readers understand the situation perfectly well, so we wish them a successful weekend (or continuation of the vacation) and a fruitful work week!