The American financial markets continue to lead the new world of industry 4.0, fintech and VIX, at lows without any setbacks on indicators and with the awareness that inflation will grow with great moderation and without putting pressure on future decisions of the Fed.
No bubbles or clouds on the American skies or on the Asian markets, which are well focused on the entry of the Chinese Stock Exchange in the Morgan Stanley Capital Index, with an unusual hyperactivity, as well as on the successes of the Japanese Premier Abe's policy. And this offers space to the European markets, which in the event of a correction from the USA would be sucked into them, but can now concentrate on the political dynamics of a new social democracy, which has a young face given by the renewal of Macron (who has asphalted the old left behind even his "former boss" Hollande) and a mature face that speaks to people, that of Jeremy Corbyn. After having strengthened the Labor party in the recent elections, the leader of the British opposition gathers further support after the tragedy of the Grenfell Tower and all the contradictions of a story with serious implications for the May government.
Two miracles positioned differently in the political arena: Macron who finds confirmation of an overwhelming majority in the legislative process, while Corbyn, after having recovered most of the 24 points of disadvantage compared to Prime Minister May's conservative party, increases the number of seats as never before happened in the last twenty years. Two record-breaking politicians and two veterans of socialism, with a more centrist Macron and a more left-wing Corbyn than ever.
But both bearers of values that embody a new social democracy, which offers constructive objectives and which speaks to the people starting from two certainly different economic and social plans but both effective for the reality of two countries severely tested by the terrorist threat.
Yes, because on security and foreign policy the position of these two leaders is clear-cut and uncompromising as it should be when facing a state of emergency that frightens citizens and affects the economy and civil life of countries that remain crucial for global balance .
Meanwhile, Brexit talks have started, but it is clear that May is not a reliable counterpart and was in fact disheartened by the recent vote, in which she instead sought strong popular support which was lacking. Recent British events have complicated the political picture, with Corbyn and the mayor of London storming the Westminster fort, while the Premier is now a shadow of herself and is hiding behind her foreign minister – as well as the mad creator of the “ Easy Brexit” – Boris Johnson.
And as if that weren't enough, the rating houses continue to issue warnings about further downgrades for Great Britain which are sinking the British pound and forcing the Governor of the Central Bank Carney to hold back on future rate hikes.
From the point of view of the government bond markets, Spain falls while French OATs remain at their highest levels, with significant placements by dedicated funds, also supported by the good data on the flows that arrive in large quantities on the European stock markets, continuing a positive series of 12 weeks which has not been seen since December 2015. Flows therefore still positive for American and European markets, to the detriment of emerging countries, which are losing momentum. Or rather, after a performance that has exceeded 17% since the beginning of the year on the MSCI Emerging Markets, the realizations prevail as a balance sheet for the first half.
Even the Eastern European front is losing attraction, because it is conditioned by the migrant issue which remains an open front in the EU with the incipit sanctioning Poland, Hungary and the Czech Republic who do not respect the agreements on the relocation of asylum seekers from Greece and Italy signed in 2015, so much so that out of 160 people they welcomed less than XNUMX. A demonstration that retaliation will have to be resorted to on the European structural funds that these countries implement, given that not only do they not respect their commitments, but they don't even seem willing to enter the Eurozone. And investors therefore stay away.
While the siege of May continues and the markets are not resigned to Brexit, now all the attention is on Macron's labor market reform: time is running out and we need to hurry, before the German elections in September, because already with the the July summit between France, Germany and Italy will lay the foundations for a definitive plan for the reform of the Eurozone. Who knows, maybe Italy will not take an example from the electoral campaigns of its European partners to go back to considering socio-economic issues as a priority. A leader could emerge to guide a political renewal that will allow us to sit at the table of the big ones, of the countries that count in the Eurozone, thus avoiding losing the consensus of the markets.
