There is a surprising correlation between stocks and political trends
by Editorial Staff
Updated: January 13, 2017
Below, you'll find an excerpt from a new special study our monthly European
Financial Forecast published on December 1, 2016.
While the mainstream analysts weigh macro-economic and sociological factors
to make forecasts for the busy European election season next year, the model
below shows you an entirely different approach.
* * * * * * * * * *
The European Financial Forecast December 2016 issue (data through Dec. 1)
EUROPEAN ELECTIONS SPECIAL
(and you thought the U.S. election was contentious)
"The main social influence of a bear market is to cause society to polarize
in countless ways. Separatism becomes a force as territories polarize. Populism
becomes a force as classes polarize. Third parties, fourth parties, and more,
find constituents."-- Conquer the Crash, 2002
The poisonous U.S. election battle is over, but Europe's "unprecedented 2017
voting season" (Bloomberg, 11/9/16) is just now kicking off. Let's get up to
Italy (December 4, 2016)
The vote: The first of Europe's critical votes happens
this weekend in Italy. Italians will vote on the "most ambitious
government overhaul in decades." (Bloomberg, 7/31/16)
The market's verdict: The Italian MIB index (right) sports
major declines on both a near-term and long-term basis, so social
mood favors a defeat for the referendum. (Editor's note: The vote got a "no.")
Netherlands (March 2017)
The vote: Geert Wilders, the leader of the anti-EU, anti-immigration
Freedom Party, remains well ahead in the polls.
The market's verdict: It's hard to say how this one will
go, as the Dutch AEX index (left) sports a massive near-term rally
within an even more massive long-term decline. In other words, social
mood shows a mix of bull- and bear-market forces and so does the
France (April and May 2017)
The vote: The main event for European politics will undoubtedly
be the French general election. Far-right National Front leader Marine
Le Pen may very well become France's next president.
The market's verdict: The CAC 40 (right) reversed from a
15-year resistance line. Socionomically, a win for Le Pen, though
not guaranteed, is about to become far more likely. [Her] platform
is tailor-made to capitalize on a negative mood trend and, love it
or hate it, the National Front's position near the top of the polls
speaks volumes about the bear market's progress to date.
Germany (Elections: October 2017)
The vote: German stocks remain near all-time highs. So,
for now, the social mood trend favors the incumbent, Angela Merkel.
The market's verdict: Support for Germany's far-right, anti-immigrant
AFD party has spiked since the DAX's peak (left). A lot can happen
in a year, and if the DAX [goes] lower, Merkel should lose the chancellorship
by a wide margin.
Yes, you can learn a surprising amount about a country's future political
trends by studying the bullish or bearish trends in its stock market -- a concept
Brian Whitmer, EWI's own European Financial Forecast editor, has
been coupling socionomics and Elliott wave counts together since 2004, to keep
his subscribers ahead of key trends in the European financial markets.
Now, for free, see how Brian used these concepts to stay
ahead of three of Europe's biggest 2016 events: Brexit, the euro collapsing
to a 14-year low against the U.S. dollar, and the big reversal in bond prices, in our
free report, "Europe: A Turbulent Year in Review, and
a Look Ahead."
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