Earlier today, newswires reported about the imploding German economy. There is no doubt the German economy is not doing overly well. Despite most global risk themes calm, the engine of Europe seems depressed. We ask ourselves what would happen if car tariffs or any other “hot” topic would revive as themes?

Dax, like pretty much any index, is up YTD, but it is not an impressive rally. The DAX remains trading heavy. Note the longer-term negative trend line here, as well as the 100-day moving average. First big support is at the big 11 000 level.

Much has changed from last year’s panic, but it seems that the Euro area economy has not changed to the better. Equities have bounced and index volatility levels imploded as a result “all seems calm”. Given the poor economic data, as well as several macro assets actually moving over past days (USD one of them), it looks to us the main European vol index, V2X, is pricing a world of perfection only.

What if things aren´t as perfect as the market is pricing?

Source; charts by Bloomberg