What In The World Is Going On?

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Is the British government going to ignore the will of their citizens and not leave the EU? The EU’s immigration policies are sparking political backlash and citizens are taking to the streets. In January, Bloomberg reported, “Mario Draghi Sounds Economic Alarm for the Euro-Area”, citing persistence of geopolitical uncertainties.

What in the world is going on?

It’s time to turn to the international member of our panel of experts, Rob Vrijhof, managing partner of Weber Hartmann Vrijhof & Partners Ltd., Swiss international asset managers, for a worldwide perspective.

DENNIS: Rob, thank you for taking your time to help educate our readers.

It’s impossible to look at the investment markets without factoring in the worldwide political environment.

Before we get into investment details, can you bring us up to date on what’s happening in Europe and the investment implications?

ROB: Dennis, thank you for the opportunity to talk to your readers.

There are some dark clouds hanging over Europe’s head. Especially the never-ending Brexit issue. Great Britain and the European Union (EU) are still far apart after two years of discussions. We expect an extension of the March 29thdeadline. Hard Brexit, soft Brexit or even a new referendum? Only time will tell.

The yellow vests protesting in France continue, despite President Macron giving in to some of their requests. The immense victory of President Macron is certainly fading away. Today, there is no end of these protests in sight.

The European Central Bank (ECB) isn’t helping either. Mr. Draghi is still saying Europe will not fall into a recession. He feels no pressure to start a cycle of rising interest rates. This will eventually cause problems for Europe.

We believe that the US economy will fall into a recession; probably during the second half of 2020; and will be followed by Europe. While the Fed has some wiggle room to lower interest rates, the ECB doesn’t. We will be monitoring these developments very carefully.

DENNIS: Recently Federal Reserve Chairman Powell urged lawmakers to address “unsustainable debt”. Then he added, “Uncertainty is the enemy of business. It could get even worse if Congress does not lift the debt ceiling in the coming months.”

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Ayelet Wolf 1 year ago Member's comment

Why did they originally open up the #Brexit issue to a referendum in the first place? Seems like it simply opened a never ending Pandora's Box which is costing the PM her job.