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Trump, Brexit, European elections… not all is going according to plan… Review, scenarios, and strategies

 

The essential

The Trump effect, the Brexit effect, and the impact of European elections are probably three of the top risk / opportunity factors for 2017. We have mentioned the risks of these events being mispriced by the financial markets, with a tendency toward indifference to Brexit, optimism on the Trump effect, and pessimism on European elections.

To us, these three attitudes are not reasonable. Of course, these are still major events, but we must be more watchful on the fall-out from the triggering of Article 50 of the Treaty of Lisbon, giving the UK the green light on exit negotiations; and we must be more constructive about European elections, which, one by one, are showing that populism is not powerful enough to be decisive (contrary to the US and the UK). Finally, we must be more cautious about the “Trump effect”: do not bet on an acceleration of growth and remain soft on the “repricing” that stems from the current economic policy. The consequences are clear: weaker rate hikes, US equities at risk, European assets less risky, GBP potentially in danger, and emerging asset classes in a good position.

 

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April 2017

 

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Avril 2017

 

The Article

L'Article

The table below provides a summary of the three key events, each one seen from the perspective of hopes (Trump and Brexit) and fears (Europe), and then from the perspective of what we think the real story will be. Attention: significant differences...

2017.04---Cross-asset---Asset-allocation---graph2

 

2017.04---Cross-asset---Asset-allocation--this-month-topic---graph3
Philippe ITHURBIDE, Global Head of Research, Strategy and Analysis at Amundi
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Trump, Brexit, European elections… not all is going according to plan… Review, scenarios, and strategies
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