Angela Merkel Sees No German Recession, Stays Strong On The Euro (EWG, BUNL, ITLY)

Robert Scott Martin:  Angela Merkel remains optimistic about Germany’s ability to withstand a larger economic slowdown without suffering more than a “flattening” of the growth curve. 

The German chancellor is a regular at the Frankfurt Motor Show, seeing the trade expo as a good venue to promote her country’s industrial reputation and competitive muscle.

But where last time around she touted green cars as the future, this year she focused on the here and now.

She says that despite the deep problems elsewhere in the euro zone, the German economy is still growing — “pointed up,” in one translation — and the euro is still as stable as ever.

It is nice to hear that at worst, Merkel sees German growth flattening out. Germany is the economic engine of Europe and a recession there would be disastrous for weaker members of the euro zone as well as German stocks.

As it is, the German ETF (NYSE:EWG) plunged 33% from the end of July to an intraday low of $17.23 on Monday:

It is rebounding today.

There were a few disappointments in Merkel’s speech. Notably, she remains adamant that a combined bond offering backed by multiple euro zone members is the wrong way to go.

“I consider euro zone bonds to be absolutely wrong,” she is being quoted as saying.

Needless to say, she doesn’t want to see Germany’s credit markets dragged down to where Greece, Italy, Spain, Portugal and Ireland have gone.

Take a look at the relative performance of German bond fund (NYSE:BUNL) and its Italian counterpart (NYSE:ITLY) for why:

Written By Robert Scott Martin From Emerging Money

Emerging Money provides insightful and timely information about the increasingly important world of Emerging Market investments. CNBC Emerging Markets Contributor Tim Seymour leads the team of Emerging Money to bring you cutting edge global news and analysis.

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