Unimaginable #7**: Populists on the retreat (lose European elections)
– not in Germany!
Today Germany celebrates 27 years of unification and is in the midst of forming a new government after recent federal elections. Merkel’s party has the leading mandate and it looks like it will most likely be a “Jamaica” coalition (CDU/CSU+FDP (liberals) + Greens). The stunner in the elections was the success of the AfD (Alternative für Deutschland), which is radically right conservative, populist. The chart below shows how anti-immigration sentiment vs migrant unemployment appears with Great Britain and Germany standing out, explaining Brexit and the recent success of the AfD in Germany.
The migrants’ unemployment rate versus the anti-immigrant sentiment index. The relationship is not intuitive.
Source: Goldman Sachs, @joshdigga / WSJ The Daily Shot
**“Imagine the Unimaginables” for 2017 is an annual attempt to identify what the capital markets are expecting in the months to come and therefore have efficiently discounted. It is an act of trying to identify consensus. This was originally published on December 1, 2016 and speculates what might happen in 2017 and is not yet discounted. Update: Imagine the Unimaginables 2017 (Link)