European Depression

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Eurozone GDP figures show a -12.1% (year-on-year) fall in the second quarter of 2020.

European GDP for Q2 (year-on-year)

Spain is hardest hit, with the Madrid General Index headed for a test of its 10-year low at 600. The Trend Index peak below zero warns of strong selling pressure.

Madrid Index

Italy is only marginally stronger, with the MIB index expected to break support at 18000, warning of a test of 15000.

FTSE Milan Index

France's CAC-40 has also not exceeded its 2007 high. Another test of the March low at 3600 is likely.

CAC-40 Index

Germany's DAX is likely to test support at 10500 but is in a lot stronger position on the 10-year chart (compared to its 2007 high).

DAX Index

The Footsie shows strong selling pressure, similar to Madrid, warning of another test of its March low at 5000.

FTSE 100 Index


The NBER defines a recession as "a significant decline in economic activity that is spread across the economy and that lasts more than a few months." While there is no formal definition for a depression, The Economist in 2008 proposed two measures:

  1. a decline in real GDP exceeding 10%; or
  2. a recession lasting two or more years.

On the first criterion, the Eurozone GDP decline of -12.1% qualifies as a depression.

"Recession is when your neighbor loses his job. Depression is when you lose yours. And recovery is when Jimmy Carter loses his."

~ Ronald Reagan (1980)


Colin Twiggs is director of The Patient Investor Pty Ltd, an Authorised Representative (no. 1256439) of MoneySherpa Pty Limited which holds Australian Financial Services Licence No. 451289.

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