Is Germany’s election the game changer investors didn’t see coming? #NewsGerman

00:00 Speaker A

All right. Well, the euro briefly moving higher as conservatives in Germany win elections. However, European markets still weighing what comes next. Traders are eyeing attractive opportunities in the global arena. Fed Watch advisors founder and chief investment officer Ben Emmens joining us now to discuss Ben. Before we dive into Europe, I do want to start with what we’re seeing here in the US and the action that we saw during today’s session and that little bit of a pullback at the end of the day, following on the pullback that we saw last week, the markets kind of overall have shrugged off a lot of the tariff headline risk. Do you, what do you think sort of breaks through? Is it, is it March 1st, if those tariffs do end up going into effect?

01:25 Ben Emmens

Yeah, I think the markets are banking on that, it will ultimately all come together. This is the way President Trump sort of manages this process, right? A lot of threats, but then it gets the parties at the table and there’s a conclusion. It’s just like we’re seeing it playing out with the Ukraine situation where this mineral deal gets signed ultimately after a lot of threats. This is sort of similar style. So I think this is why you get a very choppy reaction in markets currently, a sort of sideways on the S&P and a sort of sideways on the 10-year little lower. It’s nothing like a flight to safety and certainty environment. It’s really about waiting. As you say, watch for waiting, if you call it that way. Because we do get that important data in between of inflation and other type of data. I also think what was an interesting other news fact was that the administration going after, for example, Mexico to try to force them to also raise their tariffs on China too. So it’s not just US raising tariffs from Mexico, but also Mexico raising tariffs from China. So it’s all about a similar idea of like, we want to get to an outcome ultimately, we’re getting a better global trade system. At least that’s the hope. I think this is where markets are waiting for to get their confirmation.

03:48 Speaker A

Ben, I’m also very interested to get your take on, on what we saw in Germany and the elections there. It looks like Ben the Centris, led by Frederick Mertz, prevailed. Though we also did see strong support for AFD. What does that tell us, Ben, about the German electorate? What do investors need to know?

04:22 Ben Emmens

I think there’s two things to take away from that. One, there is a big swing to the right again in Germany, which is happening across the eurozone over the last several years. You know, I’m myself from the Netherlands and I’ve noticed that too. Huge swing to the right and I think it is really reflection of voters just being really uneasy with everything that was done during the pandemic and the aftermath. I think that plays in Europe just as much a role there as it plays here. But then it’s the bigger picture about, and this was important news, so Merz’s party, they’re negotiating about this defense fund, right? This is about two and a billion. I think that got the market a bit turned on today of that, they really want to put that fund together and invest in defense. And in addition, you can tell from German small caps and from technology shares, they have outperformed US markets, I think really because of a focus more inward by a party like from Mertz that wants to look for more investment in Germany. Almost with the quote that he said himself, Mertz von, we want to be, let’s say, not dependent on US. I thought it was telling because it just indicates that they want to avoid these tariffs. Also don’t want to rely on the US. They want to drive the economy themselves. I think that’s the takeaway from these elections.