Tuesday, 14 February 2017
Why should I follow European politics?
This year is going to be very interesting for those trading from a fundamental standpoint, especially for market participants who carefully look at the political sphere. Trump's inauguration was a moving event... let's face it. We've all cry for some reason, right? But Mr. Trump won't be at the center of the stage the whole year (or yes…) but there is still much more out there.
In case you haven’t noticed, the political concerns are not so centered in Trump as they used to in January. Slowly but steady, investors are shifting their focus to the European calendar and four events that promise to shake financial markets: elections in the Netherlands, Germany, France and (may be) Greece are now on the spotlight and here is a brief explanation for that.
--- Germany and France ---
Why are this elections so important? Simply said, because the stability of the European Union is on stake here. Just think about it, Germany and France are the two most powerful nations of the bloc. If right parties win the elections, it's not to keep things steady and smoothly as they are now. Scared about Trump's protectionism? Take a look at far-right French Presidential Candidate Marine Le Pen proposals:
- Establishing monetary independence
- Renegotiating France's membership in the EU
- Anti-immigration policies
Like it or not, Le Pen is ahead in the polls and her ultraconservative agenda could become a reality faster than you think. But keep it cool, so far, political analysts believe she wouldn’t win in the second round and the position would be disputed between independent Emmanuel Macron or center-right Francois Fillon.
--- The Netherlands ---
Enough? And protectionism is not the worst case scenario. If not, take a look at the Netherlands, a wealthy and stable country that could leave the EU in the upcoming months. How is that? Again, e-l-e-c-t-i-o-n-s. Geert Wilders, the leader of the Party for Freedom, is ranking on first place for the March 15 election. And of course, he thinks it's best to follow "the British way" of doing things (if you know what I mean #Brexit).
--- Greece ---
Last weekend, Alexis Tsipras sent a clear message to the IMF and Germany: “stop playing with fire”. Don’t get it? Look, he’s kind of furious because of increasing pressure to set a new wave of economic reforms in the country, which basically kills him from a political perspective. Therefore, we see that the Syriza leader is trying to balance his power and popularity, while trying to unleash some pressure from creditors.
If the country is not able to navigate the debt payments scheduled later this year, then either new negotiations for a bailout would have to begin. Of course, such scenario could prove wrong that Greece’s best option a year ago was to remain inside the European Union, opening the doors to early elections and (may be) a so-called “Grexit”.
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