It’s easy to build a buy case for European equities at the moment. The economy is booming, earnings are growing, politics look as stable as they have been for years and the European stock markets have lagged behind for so long that surely it’s time for some catch up? But perhaps constructing this buy case is a bit too easy?
Last week, in one of our daily morning team meetings (when all the economists, strategists and fund managers gather round to exchange market-relevant news and views), each and every one of the contributions was about politics; including Brexit, Germany, Italy, Catalonia, the Netherlands, the US and Japan.
A week is a long time in politics, as Harold Wilson famously said. So one can only imagine what he would have made of the past year in which the UK has voted for Brexit, changed Prime Minister, triggered Article 50 and held a general election. And while the political saga has been going on, the effects on the UK economy are only just starting to appear.