Only the Strong Survive

Politicians come and go; Economies survive

So, we have a 'snap' election in the U.K. The ruling Conservative party is behaving at its most beastly, that is according to the Socialists and Anarchists, in kicking the opposition Labour Party while its down.

Labour has no credible leadership, no credible policies, and no credible chance of being elected. Though it seems they haven't gotten the memo as of yet.

It is ironic that The Scottish National Party, which came to prominence due to the failed independence referendum has effectively handed the Westminster Government to the Conservatives for an entire generation. Sarcasm is after all Irony's hipster cousin.

It was always a truism that Labour couldn’t win an election without winning Scotland, such was its lack of grassroots support in the English Shires.

The pound quite liked the announcement of an election, rising by almost 4% against the Dollar. The dollar was, at the time, suffering a downturn of its own following one of Donald Trump's strong dollar/weak dollar flip flops.

The Euro fared a little better with Sterling rising by just shy of 2.5%.

The Euro is now entering its political maelstrom with the Presidential election being completed by May 7th. Just how much effect the most recent terrorist incident will have had on the voters is impossible to say. Since Charlie Hebdo in January 2015, there have been successive attacks with Nice and Bataclan the bloodiest. Marine Le Pen, the Front Nationale Candidate, is the only one of the major candidates with a specific plan to deal with the threat. However, her other policies; Anti-Euro and Anti-E.U. are possibly a little too radical.

The French electorate is a little like a marching army in their affiliations; Left, Right, Left Right. It would seem that following, Socialist, Hollande a right of the centre candidate will be elected. Of the front runners, that means Le Pen and Emmanuel Macron, should contest the run-off.

Looking back thirty years and allowing for the Financial Crisis, it is clear that the economic effect of the leaning of the party in charge has less impact on the economy than is generally publicized by the opposition. In the U.S. eight years of Obama saw good and bad depending if you are a Republican or Democrat. Jeremy Corbyn in the U.K. emphasizes the cuts in spending being put in place by the Government. He then fails to recognize that his spending plans would create a huge borrowing requirement.

The same is true in France, Socialist or Conservative, the electorate are among the most radical in Western Europe in complete contrast to those in the Netherlands where their electoral system almost guarantees a coalition.

The Brexit vote and the U.S. election were exact definitions of a “Black Swan” event. So, to expect similar in France, The U.K., or Germany later in the year defeats the whole idea. Once an analyst tries to justify, say, A Labour victory in the U.K. or a landslide for Le Pen, the whole idea vanishes.

Following the U.K. election whoever gets in will have a huge hole in public finances to fill, Brexit to complete and public safety to negotiate besides a hundred and one more domestic issues. It is the how rather than the history that interests voters.

Q2 is always seen as the money-making quarter by traders! Q1 is seen as preparatory, Q3 is holidays, and Q4 is to protect what you already have!

This Q2 could be archetypal!