29.10 - changes for political and economic future are ahead

German election makes us question Merkel’s policies. Us and the rest of the world.

German election makes us question Merkel’s policies. Us and the rest of the world.

German elections signal about more political and economic instability.

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Future of the 4th term of Angela Merkel is now hanging by a thread. There is no certainty that it is going to happen as we watch the results of the elections that were ongoing in Germany over the weekend. And no, this was no an election for the German Chancellor, that was an election for the local government. And while that may not seem that important, believe us when we say that this one absolutely has to be paid attention to.

Christian Democratic Union that is headed by Merkel together with the allies the Social Democrats have not seen a result as bad as this since the end of World War II. The alliance is now surging leaving the Green party and Alternative for Germany right behind. Several weeks after the election, and that means in the nearest future we are to prepare ourselves for a small political crisis in Germany as Markel is going to address the loss of her party today.

The most unsettling thing is the fact that the result of the elections is going to be the pivotal point for Merkel’s political career. it is going to be up to her lost party to determine whether she is good enough to take over the country for the fourth time in a row. And we predict that the picture is not going to be pretty. After all she put her party in the present position where the trust of people sank to almost historical low.

The real hazard lies in the fact that even though Merkel and Macron were dealing with international matters together, Angela was the one who became a real face of the political scene of European Union. There is no politician in the region that would be as recognizable and who can say that in their wake they are leaving the country as strong and prepared for future shakes as her. But she also made several bad decisions that now can come back and bite the entire world.

For example, Merkel is pretty loyal when it comes to international monetary credits. She gave several of those to different countries across Europe and not always it was a good investment. Look at Italy. How are the Italians thanking Germany? By putting a mine under Euro and almost pulling the pin with the newest monetary policy.

Greece. It took several credits for the Greeks to overcome the results of the economic crisis of 2008. All of that with German money. There is also a problem of refugees who were let in the country after Merkel opened the borders for them. And a lot of other small and big problems.

But people tend to forget the Markel was the one to negotiate Trump away from imposing tariffs on EU. She is the one negotiating through Brexit and at the same time keeping Germany safe and strong.

We will have to wait for the results of the meeting, but it is clear that in any case we are to wait for the changes in the region. In Case Merkel is pushed aside changes will be made and in case she stays – we are guessing that her policies are going to change so that to suit German people better.

Global economic growth is slow.

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Slowing down of the economic growth was signal by none other than the prices for oil. We can see today that the prices for the black crude are falling down and not even the output and supply fears and shakes are able to get the prices up. We figured that with Iranian sanctions the prices would surge, but we didn’t count on the fall as big as the one we see today especially with supply in question.

All and all economic growth around the world is totally under the control of a bear market at this point. It is the main reason for the selloff of everything that is possible and profitable to selloff today. We see that Asian markets see no support from traders as well as investors just as Chinese- American trade war gains more power over the fears and dying risk hunger. Crisis on Europe and Italian question becoming more and more sharp also adds towards the pace slowing down. and we are not even going to talk about the toll that is brought on by Brexit.

Oil prices falling down is just a first stage for the bigger problems for traders. Ss we watch everything being sold off we come to understand that it is a crossroads for us at this point. We can either get in the certain assets trading now, as the prices sink uncontrollably, but there is a huge risk with that – what if the prices do not bounce back for a long time. Are you ready to long everything? We are guessing not.

The second path is for waiting the selloff out. Look at the other asset – greenback is growing again. There is a whole lot of trades there.

And the third path is more of a question – what to do when everything is sold off? Is there a direction after the maximum amount of instable assets is sold? That is the question to be answered. In the nearest future as we watch the market turning to the bears – slow and sleepy. Such will be the trading if the bears decide to stay.

 

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