Macro Commentary
Here it comes again. The headlines of anti-austerity in the periphery of Europe are back in the newspapers. There is certainly fatigue by investors over the recurring issues in Greece that last flared earlier this year, but the anti-austerity sentiment seems to be broadening. This week there was a vote of no confidence in the administration of Portugal. There are also stories of Tspiras’ flagging influence in Greece. It is a healthy reminder that the issues of debt, unemployment, and slow growth in the Eurozone are not fully resolved – just dormant. With elections in Spain next year and the political impact of the refugee crisis growing even in Germany, we must remain vigilant.
Meanwhile the pressure on Draghi to act grows. While credit is growing and unemployment, while high, is on a downward trajectory, the third quarter GDP reading missed expectations. Granted, there may be little difference in how 0.4% growth feels relative to 0.3%. While there may be some boost left from the euro’s depreciation, much of the impact has likely worked through the system. We will see next month what tricks are left up the European Central Bank’s sleeve.