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  • The announcement of an early Greek presidential election had a direct, discernible impact on markets (Greek equities fell almost 13%). The issue goes beyond Greece however. With elections in Spain and Portugal next year, and the ever possible risk of Italian elections, this is a reminder of Euro political risk.
  • The reaction of Greek markets is a more general reminder of how important political risk has become to modern investing. Political risk operates through fiscal and regulatory risk, and has a bearing on expected returns, arbitrage possibilities and the reversal of the globalisation of capital.
  • In economic data Japan's consumer confidence fell yet again (wage concerns seem to be dominating). Chinese inflation came in lower than expected on lower food and fuel prices, and we think will prompt further interest rate reductions.
  • French industrial production data is due from the Euro area. The US gives us the third quarter service sector survey - not necessarily a market mover, but helpful to economists in the wake of healthcare adding volatility to recent GDP reports.

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