Macro Monday 39 (Part B) - Predictive Power (EU ZEW Vs EU ESI)
Macro Monday 39 (Part B)
This chart is a summary of the past two weeks of work in Macro Mondays on the EU Sentiment
The Chart illustrates the forward looking Euro Area ZEW Sentiment Index (red line) and the current sentiment outlook via the Euro Area Economic Sentiment Index (the "ESI", the blue line).
In the chart I have used thick orange lines to illustrate when the forward looking ZEW Index moved negative ahead of the ESI Index. I have used thick green lines to inform of us of when the ZEW Index moved into optimism ahead of the ESI Index. The Chart demonstrates that the ZEW Index is actually a moderately decent forward looking indicator. Hats off to those 350 economists that complete the surveys in the ZEW Index. Whilst it has been great at providing some leads, the ZEW Index is not always accurate and does not always offer the correct lead direction however historically we can see that it certainly has had predictive power at certain junctures and thus its a useful data set to monitor for EU sentiment.
▫️ At present the forward looking ZEW Index has moved into optimism whilst the current outlook via the ESI is in pessimism.
▫️ If the ZEW Index gets above the 38-42 level, it would really help concrete the sentiment shift to optimism. This is not disregarding the fact we are firmly in positive forward looking sentiment territory already. Historically there have been many rejections lower from this 38 -42 level, thus getting above it would be a real conclusive move. Furthermore, the ESI is at 95.4, if the above were to occur with a move above 38 - 42 on the ZEW Index and the ESI was to move above 100 into positive territory, we could really start to lean firmly positive for the present and into the future.
The beauty of this chart is that you can go onto my TradingView Page and press update, and the chart will update you with both metrics, informing you at a glance with how these metrics are performing collectively with a nice visual guide.
Thanks again for coming along and I hope this chart helps you in your current and future understandings of EU Economic Sentiment, which is an important global economic lead.
Bottom line is, economic sentiment appears to be leaning optimistic for the immediate future, however we await more readings for a conclusive trend direction.
PUKA
This chart is a summary of the past two weeks of work in Macro Mondays on the EU Sentiment
The Chart illustrates the forward looking Euro Area ZEW Sentiment Index (red line) and the current sentiment outlook via the Euro Area Economic Sentiment Index (the "ESI", the blue line).
In the chart I have used thick orange lines to illustrate when the forward looking ZEW Index moved negative ahead of the ESI Index. I have used thick green lines to inform of us of when the ZEW Index moved into optimism ahead of the ESI Index. The Chart demonstrates that the ZEW Index is actually a moderately decent forward looking indicator. Hats off to those 350 economists that complete the surveys in the ZEW Index. Whilst it has been great at providing some leads, the ZEW Index is not always accurate and does not always offer the correct lead direction however historically we can see that it certainly has had predictive power at certain junctures and thus its a useful data set to monitor for EU sentiment.
▫️ At present the forward looking ZEW Index has moved into optimism whilst the current outlook via the ESI is in pessimism.
▫️ If the ZEW Index gets above the 38-42 level, it would really help concrete the sentiment shift to optimism. This is not disregarding the fact we are firmly in positive forward looking sentiment territory already. Historically there have been many rejections lower from this 38 -42 level, thus getting above it would be a real conclusive move. Furthermore, the ESI is at 95.4, if the above were to occur with a move above 38 - 42 on the ZEW Index and the ESI was to move above 100 into positive territory, we could really start to lean firmly positive for the present and into the future.
The beauty of this chart is that you can go onto my TradingView Page and press update, and the chart will update you with both metrics, informing you at a glance with how these metrics are performing collectively with a nice visual guide.
Thanks again for coming along and I hope this chart helps you in your current and future understandings of EU Economic Sentiment, which is an important global economic lead.
Bottom line is, economic sentiment appears to be leaning optimistic for the immediate future, however we await more readings for a conclusive trend direction.
PUKA
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