I said Father Washington, you’re all mixed up
Collecting sinners in an old tin cup
Well, spare a listen for a restless fool
There’s something missing when I read your rules
A Soapbox Opera
Doris has passed, other storms may be brewing, but is spring approaching? Metaphorically, this is what investors have been wondering as the reflation trade gathered steam. The economic outlook undoubtedly looks bright with macro data that is generally (and sometimes surprisingly) strong in the major regions, including the UK. Inflation is rising, but not yet to worrying levels. Global earnings growth has turned positive for the first time in a while. And consumer and business confidence have been rising to multi-year highs. So what about those storms?
Check out Pettis: Capital Flooding Into US as Global Trade Environment Deteriorates
As has been the case for much of the past decade or so, these involve political events. First, on March 15 Dutch voters are going to elect a new government. Although polls are fluctuating, the populist Freedom Party (PVV), headed by Geert Wilders, has a high probability of becoming the largest party in the Netherlands. Nevertheless, the fact that almost all other parties refuse to enter into a coalition with them will likely prevent the PVV from governing. On the other hand, trying to establish a majority government between other, but smaller, parties could become troublesome for this small but increasingly Eurosceptic country.
This post was published at FinancialSense on 02/28/2017.