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Blain’s Morning Porridge – 29 Oct 2018

“We are not now that strength which in old days, moved earth and heaven, that which we are, we are;”

I’m up in Edinburgh for a few days, so Porridge might be a bit sporadic this week. Will try to keep it updated.

UK will be distracted by UK Budget. Loads of stuff in the papers – so I won’t bore you further…

Instead, I’m adding a new list to my list of Blain’s Market Mantras: “The deeper you delve into a problem you perceive to be the next crisis, the more certain you can be it will erupt somewhere else.”*

Politics are a major driver of market sentiment. As the US is front and centre of global growth, the market is fixated on the looming US mid-terms. This morning there are plenty of headlines about Germany.. concluding Merkel had a narrow escape in the Hesse elections. The CDU got a spanking, but it was the SDP that suffered the usual fate of Merkel’s coalition partners – a complete shoeing. Analysis and commentary seems somewhat relaxed about it.

I reckon there is more to come. Despite some reassuring post result comments from the SPD, the sustainability of the coalition in doubt as the CDU wakes up to the reality of Merkel past her sell-by date, and Europe heads into a very dangerous 2019.

I did joke earlier this month – who gets chopped first? May or Merkel?

I suspect the noise we heard from the East last night was the prelude to Merkel’s Gotterdamerung. A slow motion crisis as German politics unravels could prove a massive distraction for Europe. It’s certainly worth keeping a close eye upon.

…click on the above link to read the rest of the article…

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