Investors are counting down to the most important date on Europe’s political calendar Two major European political events fall on Sunday, March 4, leaving investors to brace for what a worst-case outcome could mean for European assets.
On that day, Italy goes to the polls in a national election, while Germany’s center-left Social Democratic Party announces the result of its vote to decide whether to join a grand coalition with Chancellor Angela Merkel and her center-right Christian Democratic Union. The outcome could set the tone for the continent’s currency and political landscape for the rest of the year.
A result that’s seen increasing political turmoil could drag down the euro EURUSD, -0.5562% which has strengthened against its rivals over the past year, and lead government bonds yields to jump, particularly in Europe’s most debt-burdened countries, including Italy TMBMKIT-10Y, +1.65% For now, however, polls give analysts reason to be hopeful.
What’s going on in Italy?
Italian..Read More →

Why the ‘least bullish’ firm on Wall Street is feeling more confident in its tepid outlook Recent trading activity on Wall Street, which resulted in the strongest week for the major indexes in years, no doubt has some investors breathing a sigh of relief.
However, while stocks have recovered some of the ground they lost in a correction earlier this month, it may be too soon to get too excited about where the market will go over the rest of the year.
That is according to Morgan Stanley’s strategist, who reiterated what it called “one of the least bullish outlooks for 2018” of the major investment banks.
The firm expects the S&P 500 SPX, -0.58% to climb to 3,000 by mid-year 2018, and then retreat to 2,750 by the end of the year. Based on current levels, that represents upside of 9.9% by the summer, though the full-year target is less than 1% above current levels. For 2018 overall, the investment bank’s outlook represents “a very modest full year price return of only 3%,” analysts at ..Read More →

Soccer fans in Germany: We don’t like Monday matches They don’t like Mondays, for soccer in the German Bundesliga, anyway.
A match between Eintracht and RB Leipzig descended into “chaos and mayhem” as fans showered the pitch with thousands of tennis balls in protest of the league’s scheduling for the first time of a limited number of Monday-night fixtures. This was the first of those.
Many German fans — recall that theirs is a country where even Sunday retail is still largely verboten — decried the Bundesliga scheduling decision as creeping overcommercialization.
Thus, the tennis balls and a lengthy — at one point, according to a BT Sport play-by-play announcer, seemingly interminable — kickoff delay, as a substantial crew plying leafblowers (the protest did not come as a complete surprise, according to a Deutsche Welle report) worked feverishly to clear the playing field:
‘I guess the length of the delay will depend on how many thousands of tennis balls have been brought into the ..Read More →

Stock market rise since election not a bubble, new study says iStockphoto The stock market’s gain since the 2016 presidential election lacked a characteristic common in classic stock bubbles, according to a new study by prominent economist Olivier Blanchard.
In a paper released by the Peterson Institute for International Economics, Blanchard, the former chief economist at the International Monetary Fund, said a general improvement in economic activity and a decrease in economic policy uncertainty around the world were the main drivers behind the stock-market increase. This resulted in higher actual and expected dividends.
The prospect and eventual passage of the Trump tax cuts also played a role.
The missing trait is that investors become willing to pay more for equities than their fundamental value.
Blanchard said there was a decrease in “equity risk premium” since the election, but it was “limited” and only returned the premium to levels of the first half of the 2000s.
“The dec..Read More →

Morgan Stanley strategist says several stock-market corrections by end of 2018 make ‘a lot of sense’ That bumpy patch earlier this month—the one where the Dow industrials DJIA, -1.02% S&P 500 SPX, -0.62% and Nasdaq Composite Index COMP, -0.17% all closed about 10% below their recent peaks—was merely an “appetizer” for the investor pain that lies ahead, according to a Morgan Stanley note this week.
Andrew Sheets, the chief cross-asset strategist behind the analysis, said the “main course” has yet to come as developed markets “remain in the late stages of a late-cycle environment,” adding that “rising equities, rising inflation, tightening policy, higher commodity prices and higher volatility” back his bearish outlook for the coming quarters.
He said when growth softens while inflation rises, returns suffer the most.
“Strong global growth and a good first-quarter reporting season provided an important offset,” he said. “We remain on watch for ‘tricky handoff’ in the second quarter, ..Read More →