How the recent elections affect investors.
In February I pointed out that Europe could look very different by 6 May, with possibly a socialist French president and a recalcitrant Greek parliament potentially spelling the end of the eurozone.
Well, what do you know? It's 8 May and we have a socialist French president and a Greek parliament seemingly unable to form a government. I sold some shares last month, saying at the time that "Greek and French elections could be the trigger for the next small panic". In fact, markets have softened but held their nerve.
It's not that I have any great psephological talents. The remarkable feature of the Greek tragedy that is the euro crisis is just how predictable it all is -- both the French and Greek electorates delivered what the pundits and polls predicted.
The inevitability of all this creates opportunities as well as challenges for investors.
Stepping back a little, it's clear that confidence in the eurozone oscillates up and down, and that those oscillations are increasing in intensity.
On the first dip, our politicians quietly dropped the orthodox rhetoric of 'our European partners'. Around the time of the general election, Mr 'Cleggeron' and Mr Milliband (either) peppered every statement with the phrase.
We were told that dissolving the euro would destroy our livelihoods and plunge the continent into eternal darkness, or something like it. But come another dip in the eurozone's fortunes and it emerged that the Treasury -- and the European Commission itself -- had quietly researched what a break-up of the euro would look like.
Another cycle on, and Angela Merkel herself ratcheted up the euro risk, stymieing a referendum in Greece by threatening its expulsion from the single currency. That led to the Greek premier's resignation and the installation of a technocratic government, whose policies were widely rejected by voters at the weekend.
Only last December, when ECB president Mario Draghi admitted the possibility of the euro breaking up, and rating agency Fitch concluded that "a comprehensive solution to the eurozone crisis is technically and politically beyond reach", it was highly controversial and ground-breaking. But gradually taboos surrounding 'Grexit' were broken.
Now, some economic pundits regard one or more countries leaving the euro as more likely than not.
In-between these lows in confidence, the upside of the oscillations have been provided by bullish political noises and a new EU Treaty that technically isn't, and by the ECB inventing its version of quantitative easing: the long-term refinancing operation (LTRO).
It's not difficult to predict that we will have more of the same. Greece will continue to worry markets for some time, especially if it has to hold new elections. In France, Francois Hollande will no doubt nuance his rhetoric once in office, but his election is bound to depress confidence in the eurozone.
A renewed euro crisis will trigger a political response. So prepare to hear much talk of a 'European Growth Pact'. If things get really tough then the ECB will undertake another round of LTRO, and markets will be flush with new money. But who imagines that will be the end of the story? So there's a couple more iterations to come yet.
That suggest a twin-track strategy to me. It's still not too late to prepare for a euro break-up. It may not happen, but it's more likely now than when I first suggested it. Certainly, the bookmakers think so.
Secondly, there is money to be made in trading stocks that mirror euro confidence. Many financial stocks rise and fall in tandem with market sentiment towards Europe. If they're stocks you're happy to hold for the long term, there's a good risk-reward trade-off to be exploited by adding to your holding when euro sentiment is low and reducing when it's high.
Does that mean out-thinking the market? I regard it as just being contrarian. There are plenty of professional market participants who make their money (i.e. keep their jobs) by running with the herd.
With the rhetoric of 'European partners' consigned to the dustbin, let's hope we hear a bit more from our politicians about how we beat our European competitors. The biggest risk of the euro is our overdependence on Europe as an export destination.
In contrast, the UK's share of the BRIC nations' imports is appalling. Britain slipped from fifth to tenth place in the league of world trade between 2000 and 2010, largely because of its poor share of BRIC nation imports.
But the stability of sterling should be an enormous national competitive advantage. Unlike Mediterranean countries, there is no risk of the currency of our export contracts disappearing overnight. Unlike Germany, there is no risk of our currency massively appreciating when it ceases to be artificially held back by a currency union.
British Consulates should be broadcasting that from Rio to Beijing. And companies should be telling investors that's where their export strategy lies.
The long-term lesson is that, far from gambling our prosperity on Europe, companies and investors will earn more by following the shift of global wealth.
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