It is not the governments of some of the usual suspects where the people are unhappy and want a change, but France.
Germany is in recession with all of Europe soon to follow.
How long can markets so bizarrely ignore such earth shattering developments?
It took full mobilisation of 48,000 police in riot gear, an army, to try to fight back against the protestors yesterday. The crowds and demonstrators are in their hundreds of thousands across all the major cities of France.
Last night, the Swiss Army, including tanks, were dispatched and rolled through the streets of Zurich as the French unrest began to spill over into Switzerland. Tanks deployed on the streets of Zurich.
Yet, nothing has moved markets? If this were happening in a non-western country, the stock and currency markets would come under pressure. Markets would be talking of ‘Regime change’. The disquiet, the protests are not limited to the streets. There has been uproar and discord of the highest order in parliament too.
In the West, this is being reported as protests over a tragic shooting. What it is really is a loss of faith in an elitist government that continues to focus on Russia, more than the crippling impacts on their own peoples cost of living. Then lifts the retirement age to help pay for government largesse.
There is a strong anti-NATO movement growing across Europe. Especially in France and Germany and this is a big part of the story too. BlackRock’s headquarters building was completely taken over by protesters.
The economic discord and impact of what is happening domestically in Europe today is immense and will be long lasting. This is no one night of protests situation. Something far deeper is occurring here.
For markets to turn a blind eye and drive asset prices ever higher, even Germany to an all time record stock market high in the midst of a recession with no turnaround in sight, is the verge of financial madness.
Could it all subside permanently? That is difficult to foresee at the moment. President Macron is talking of a total shutdown of France today. No public transport. The army to possibly be deployed across the nation. A total ban on social media. This is dark ages stuff.
The question has to be asked?
How long can financial markets hold on in their ivory towers and ignore the reality on the streets below?
Market commentary from Clifford Bennett, chief economist at ACY Securities
