MacroScope

Election fever hits the markets

April 18, 2012

We’re not talking about the U.S. presidential vote, though that does cast another layer of uncertainty over the outlook. Rather, investors are focused on even shorter-horizon events, as evidenced by this jam-packed electoral worry list from Marc Chandler, currency strategist at Brown Brothers Harriman:

This weekend’s first round of the French presidential election kicks of the quarter that will include:

*   Greek national elections, where polls warn that the current coalition government may not be returned, increasing the uncertainty.

*   Italian municipal elections which will be, at least in part, a referendum on Monti, who has seen his support wane since the labor reform was unveiled.

*   Two German state elections, which may see the FDP further marginalized, making a grand coalition next year more likely.

*   Irish referendum on the fiscal compact.  Due to qualified majority procedures, an Irish rejection would not prevent the adoption of the fiscal compact, but would jeopardize Irish access to the ESM, should it be needed.

*   After the second round of the French presidential election in early May, there is the parliamentary election in June.

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