"A leader doesn’t control his country’s economy, but the economy mightily controls his image." -- Robert Prechter, Conquer the Crash (2002)
When you view events -- in politics, finance, or the culture at large -- through the lens of the Elliott Wave Principle, things just make more sense.
Take the recent political shake-up in Ireland, where Fianna Fàil party suffered its worst-ever election defeat. Up until now, Fianna Fàil was considered the country’s “natural party of government, but now the experts have no better explanation than to helplessly point to “forces of nature” as the reason for the party's stunning defeat.
They would get better answers by looking at the economy and the stock market as the measures of the country's social mood. That's what we do at EWI. Ireland's example is relevant and timely, because, as the editor Brian Whitmer postulates in the new, March issue of EWI's European Financial Forecast, Ireland today may be giving us a preview of the rest of Europe tomorrow.
Also in the March European Financial Forecast:
- Elliott Wave Analysis & Volatility: Germany's VDAX, the implied volatility index, collapsed in February to its lowest reading since April 2007. In other words, option traders are now less concerned about a market decline than they were at the DAX’s all-time high in July 2007. Read the full discussion of the implications in the "Market Psychology" section.
- 7000 Executives Are Bullish: The opinions of Germany's business leaders about the future of the nation's economy, the biggest in the European Union, have pushed the closely-watched Ifo institute business confidence index to a multi-decade high in February. But before you take it as an uber-bullish sign for the DAX, see our chart of the Ifo index plotted against the DAX's recent tops and bottoms. This chart will tell you something the business confidence survey numbers can never reveal.
- PIGS Update: The attitudes of European Union authorities have "softened markedly" towards Europe's recent financial "troublemakers": Portugal, Italy, Greece and Spain. Take one look at the Elliott wave patterns in their respective stock indexes and you'll understand why -- and you'll see what's likely for Europe's peripheral economies.
- Consumer Attitudes: Cheap is cheerful! The European Financial Forecast has stated previously that the public’s increasing financial conservatism would have profound influence on the economy. The trend is alive and well -- see our analysis of the latest trends in European "cheapness" and their likely consequences.