Making Holland Great Again

Europe Awakens 

Right-wing Geert Wilders has won the Dutch elections, sending a very clear signal to all the so-called progressives that a lot of Europeans have just about had enough. Wilders’s Freedom Party won the most seats, but he will face big challenges trying to form a government as other parties have said they won’t work with him – the earthquake has only just begun though and he may find some are more pragmatic than they are dogmatic. He’s on for 35-37 seats in the 150-seat lower house so needs partners. Stay tuned for our Watchlist 2024 which explores this very topic. The interesting point is that this comes just as hard-right sentiment is gaining traction across Europe; old fissures are opening up and new battlelines being drawn in the teeth of virulent anti-Semitism that has exploded since October 7th, built on a solid foundation of mass migration that is changing cities across Europe. And countries within the Euro area are struggling with their budgets and borrowing – The EU is showing signs of cracks and this might raise borrowing costs. Dutch yields seem to be a bit higher this morning…nothing too much though and the AEX is flat as a pancake…maybe it’s easy to over-read these things? 

On a related note – Argentina’s Merval index surged almost 23% on Tuesday after reopening in the wake of Milei’s victory and extended gains on Wednesday by another 6% almost. Investors are pleased to see it more than just a one-way street of lefty failure.  

Oil Slips  

Oil prices tumbled yesterday as OPEC delayed a scheduled meeting for Nov 26th by four days before retracing a fair chunk of the move. The delay was initially taken as a sign that Russia and Saudi can’t get a deal but it’s actually related to Nigeria and Angola accepting a new baseline reflecting their actual production capabilities. It’s also the case the OPEC doesn’t want things to go wrong at the actual meeting so this allows more time for assessments to be made. Traders may well be hoping for a much deeper cut to production now. 

European Market Confusion 

European stocks searched for direction on Thursday with little coming from the US side for the rest of the week. The FTSE 100 hovered a little below 7,500 as it clings to the trend resistance following three days of modest losses, whilst the DAX similarly lacked any impetus to stretch out beyond the 16k resistance. Small ranges though without the US to offer a clue…  

Thanksgiving on Wall St. 

Wall Street rose Wednesday as bond yields touched their lowest in two months ahead of today’s Thanksgiving holiday. It’s a holiday-shortened week with a half day on Friday, too – in most cases it’s back Monday. The gains cemented a strong rally in November for the US – the Nasdaq +11% for its best month since January, the DJIA +7% for its best since October 2022 and SPX +8% is the best since July 2022.  

Pricing in Cuts 

At one stage the 10yr Treasury fell to 4.369%, the lowest level since Sep 22nd. The market is now trying to figure out whether its pricing 100bps of cuts in 2024 is closer to the truth the Fed’s current dot plot factoring in just one 25bps cut next year.  

UK Charts 

FTSE 100 – trend holding, generally weaker. 

Sterling slid as the Chancellor delivered his Autumn Statement but bounced clean off the 200-day line and is higher this morning