Independent Strategy

Macro Matters

Politics Category

Independent Strategy Blog: Macro Matters

UK Boris seems to be responding quite well to treatment, which is encouraging.  The media debate that his temporary removal created a power vacuum and compromised decision making just misunderstands how Cabinet government works and was just a complete non-story chased by journalists fatigued by the Covid echo-chamber. Real question is how do we exit the current lockdown situation?  Cabinet is discussing this today and it’s expected we’ll see the initial three week period extended through to the end of the month.

Trying to look beyond to what the day after looks like is important, particularly at a political level.  Will it be a blow or a boost to the populists? In the US, France and Germany it looks like it will be a reminder to voters of the damage populists can do.  There is a broad feeling that serious government is required.

Germany

14th February, 2020 » , AKK KO

Well, that didn’t take long. After last week’s debacle in Thuringia (see our report Thuringian tremors 7 February 2020) CDU leader Annegret Kramp-Karrenbauer (AKK) found her authority fatally undermined and announced that she would soon step down to allow a new leader to be elected in the summer.  This leader, she said, should also become the party’s chancellor candidate for the next federal election, scheduled for autumn 2021.

As we expected, Matteo Salvini was defeated in Sunday’s Emilia-Romagna regional election, providing a much-needed boost to Prime Minister Conte’s fragile government and making a snap general election less likely.

On 26 January, the voters of the region of Emilia-Romagna – a long held bastion of the left - will head to the polls.  Such an election would not normally appear on the radar screen of international investors.  But this time it has strong significance as a barometer of the popularity of the current centre-left coalition that was formed in the autumn.

Does populism pose a risk to markets in 2019?  Yes! but not from the expected quarter. 2019 brought a surprise on the European front.  The support for traditional parties has been plummeting for a long time.  We call this the European souffle where support for the centre ground continues to cave over time.  Populist parties gained 20% or more of the vote in many national elections this year, thought there were signs of their vote stabilising in the most recent polls.

US Impeachment process looks likely to go on for a little longer than expected.  Pelosi’s initial hope that things could be wrapped up by Christmas, so the Democrats could start the new year on a clean slate, focused on the Presidential primaries and campaign looks hopeful now.  Pelosi has always felt the impeachment process was always driven by the left wingers in the party and never had a credible chance of success.  By delaying the process, it prevents the House from pursuing more important business such as delivering on the campaign promises of the mid-terms.

UK Russia dossier a bit of a non-event.  Attracted some media attention but sources suggest that the content is largely benign.  The main criticisms contained within was that the UK was ill-equipped to deal with this type of interference, largely because they had not expected it.  Seems a little surprising that the PM would veto publication given the content.  There is nothing that screams conspiracy.

The UK election campaign will be one of two strategies.  The Tories will build their case around their Brexit deal while Labour will try and create a narrative around the future for Britain over the next five years (trying to move beyond their promise to renegotiate and offer the deal to the electorate via a second referendum which is likely to be on the manifesto).

Tags

ADP (7) Agriculturals (1) Asia crisis (1) Asset Allocation (1) Australia (2) Autos (1) Bank of Japan (1) Big Data (1) BoJ (1) Bonds (6) Brazil (1) Brexit (5) Canada (1) Capital Goods (2) Central Bank (8) Challenger (1) China (18) Claims (1) Climate change (2) Commodities (1) Copper (1) Coronavirus (4) Corporate Bonds (1) Corporate Debt (2) Covid (1) Covid-19 (5) CPI (7) Credit (37) Current Account (1) Debt (2) Debt Crisis (4) Democracy (4) Demographics (9) Disruptive Technologies (4) Durable Goods (1) Earnings (1) ECB (9) Elections (2) Emerging Markets (4) Employment (10) Equities (1) Euro (3) Eurogroup (1) Europe (2) Eurozone (19) Exports (2) Factory Orders (6) Federal Reserve (7) Fixed Income (2) France (1) FX (2) GDP (11) Germany (15) Globalisation (8) Global Pandemic (2) Gold (2) Google Mobility (4) HICP (1) Hong Kong (1) Housing (4) IFO (3) Income (1) India (1) Industrial Production (9) Inflation (22) Interest Rates (11) Internet (1) Investment (5) IP (9) Iran (4) Ireland (1) ISM (2) Italy (6) Japan (5) Jobless Claims (1) Korea (3) Labour Market (10) Liquidity (8) Manufacturing (3) Monetary Policy (18) Money (4) Money Market (1) Money Supply (12) Myanmar (1) New Monetarism (6) New Zealand (1) Oil (6) Online (1) Payrolls (10) PCE (2) PMI (1) PMIs (1) Politics (9) Populism (6) Portugal (1) PPI (4) Production (1) Productivity (2) Profits (1) QE (5) Real Estate (1) Reserves (1) Retail Sales (11) Russia (2) Services (3) Services PMI (1) Sovereign Bonds (2) Sovereign Debt (4) Spain (4) Sterling (1) Sweden (2) Technials (1) Technicals (64) TICS (1) Total Social Financing (6) Trade (10) TSF (4) Turkey (1) UK (18) Ukraine (1) Unemployment (8) US (35) USD (9) Vietnam (1) Wages (12)

In the Media