Election 2010 Lookahead: Thursday 29 April

The who, when and where of the campaign.

With only seven days to go until the closest election in recent times, here is what you should be looking out for today:

Labour

Steering clear of Rochdale, Cabinet Office Minister and Minister for London Tessa Jowell will speak at 'The Future of Cities in Britain' debate at the Sheikh Zayed Theatre at the New Academic Building in London (6.30pm), where she is joined by Conservative Party MP Bob Neill. However all eyes will be on her boss as he takes to the stage in what will be a crucial final leaders' debate (See below).

Conservatives

A quiet day for the Conservatives, with Cambo doubtless engaged in fervent preparation ahead of the kick-off tonight (8.30pm, See below).

Liberal Democrats

Nick Clegg continues to target the youth vote by taking part in a Q&A with students at a further education college ahead of the final leaders' debate in Birmingham. He will be joined by Lib Dem candidate for Birmingham Hall Green, Jerry Evans, for the event at South Birmingham College, Hall Green Campus (9.30am) The Liberal Democrats will also focus on setting out their policies for older people today. Mr Clegg will then travel to BBC studios for tonight's debate with David Cameron and Gordon Brown (See below).

Other parties

Unilever will bring a High Court case against the British National Party after the BNP used an image of its Marmite product on their website without permission in a campaign video. BNP party leader Nick Griffin expected to attend hearing at the Royal Courts of Justice in London (10am). The SNP will hold a press conference with party leader and Scottish First Minister Alex Salmond addressing economic policy at the Point Hotel in Edinburgh (1pm).

The media

Yes, it's that time of the week again - BBC One will host the third and final live televised debate between Gordon Brown, David Cameron, and Nick Clegg. This time the focus will be on the economy, with Mr Cameron delivering the first opening statement (8.30pm). Presenter David Dimbleby will then host a 'Question Time' debate with the panel including Children's Secretary Ed Balls, Liberal Democrat finance spokesman Vince Cable, and SNP leader Alex Salmond (10.45pm) on BBC One.

Away from the campaign

Ecologists are gathering at Wytham Woods near Oxford today today to celebrate the 60th anniversary of its designation as a Site of Special Scientific Interest (SSSI), probably making it the most studied wood in Britain. The celebration includes the launch of a new book - 'Wytham Woods: Oxford's Ecological Laboratory.'

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Promoted by Janus Henderson

Europe: as the politics subside

How long can a resurgence of investor interest in Europe last?

Might Europe be the place to be?

I think European equities tick a lot of the right boxes right now. Economies are recovering – indeed the first quarter of 2017 saw Europe once more grow faster than the US, having outpaced the world’s largest economy in 2016. Valuations are not excessive, either relative to the region’s history or the US equity market. Like almost anything, I believe European equities also look compelling relative to bonds. The final part of the jigsaw puzzle might have been earnings growth, but here too Europe is, at last, getting close to achieving a gold star.

Most of this has been known for quite a few months now and is part of the explanation for the better performance of Europe year to date. Even the euro has strengthened against the US dollar, from about $1.05 at the start of 2017 to $1.12 at the time of writing. Politics looks more settled, after the surprises of the Brexit vote last year in the UK and the election of Donald Trump in the US Presidential election. Perhaps a comment I made at the beginning of 2017, that “by the end of 2017 the UK and the US might look to have been the exceptions” when it comes to successful populist votes, seems more prescient.

Now that the political backdrop is perhaps more settled, with the UK’s potentially tragic Brexit decision an exception, how long can a resurgence of interest in Europe last? One threat is the gradual move towards ‘tapering’ by the European Central Bank (ECB) of its unprecedented quantitative easing program, and the support this provides economies by injecting cash to drive down the cost of borrowing and increase consumer and business spending. But it is already clear that this will be a very slow process. The economic recovery in Europe remains quite slow and inflation, outside the UK, is well below the ECB’s target of ‘below or close to’ 2%. At the same time, the damaging effect of negative interest rates needs to be avoided.

 

What could derail this market?

The one exception to what looks to be a relatively rosy scenario, in my view, remains the UK. The Brexit ball is rolling onwards, following the invocation of the now infamous Article 50, but the calling of a General Election was another distraction. The UK is still no closer to knowing what sort of Brexit is desirable, or more likely, economically feasible. Once the reality of debt, demographics and a weak currency become clear, I suspect that the UK market will continue to struggle against other European peers.

Elsewhere in Europe, economies look well set, and I suspect that more capital spending and investment are likely to be incentivised with tax cuts in Europe, again outside the UK. In this scenario, those capital investment-related names such as Siemens, Legrand and Atlas Copco should continue to do well. Luxury names, and auto makers, many of which have rallied hard so far in 2017, are likely to struggle due to subdued consumer demand. Financials have also seen mixed performance so far, with insurance underperforming banks. This seems an anomaly given the paramount importance of long-term savings to cater for retirement.

It would be entirely healthy for European markets to drift through what will hopefully be a quiet summer, without shocks such as Brexit to contend with. I think all seems well set though for European markets to trade higher than current levels by the end of 2017.

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