What is the common point between President Donald Trump and largest hedge fund manager in the world, Ray Dalio from Bridgewater?
A congested political calendar this year, with elections in the Netherlands, France, Germany and possibly Italy in the next few months, together with renewed uncertainty over the Greek bailout programme and the UK's decision to leave the European Union, have led investors to pay increasing attention to political developments in Europe.
Investors believe that Republican tax proposals would be dollar positive. If that were to be the case, some obvious beneficiaries would be overseas earners in markets such as the Eurozone and Japan. However, the analysis is complex and we are not convinced that the dollar has much more upside.
A number of major political and economic events shaped financial markets in 2016, forcing investors to navigate a landscape of heightened volatility. But with uncertainty likely to continue through 2017, GAM’s investment managers have identified some unique investment opportunities that go against the grain.
The crowded European electoral schedule (general elections in March in the Netherlands and in Italy by May next year, general and presidential elections in April-May in France, and a German federal election in September), and the possibility of unexpected political outcomes, could lead to sharp policy shifts in eurozone member states with implications for sovereign ratings.