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Jakobsen: Markets "overconfident" about Merkel coalition
Angela Merkel has won a historic third term in office, promising "more successful years in Germany". Her Christian Democratic Union (CDU party) took 41.5 percent of the vote, just short of an absolute majority. As a result, Merkel will seek a governing coalition with an opposition party, most likely the Social Democrats (SPD), who won 26 percent.
But Saxo Bank's chief economist and CIO Steen Jakobsen, warns that markets are "overconfident" about this coalition, because the SPD will be reluctant to form one with her. They already worked with Merkel in 2005-09, and have been "doing badly" ever since because of it.
He also explains that the victory should not be overshadowed by the challenges which Merkel faces; Germany's exports are dropping, its economy is slowing down and the discrepancy between the rich and poor is growing.
Branching out to talk about how the election result will affect the eurozone, he says that Germany "needs reforms" in order to continue to strive as the regions "growth engine". But according to Steen, Merkel is just as reluctant when it comes to reforms as the rest of Europe, and as a result we are "back to square one".
For more on Steen's views on Merkel's win go to:
http://www.tradingfloor.com/posts/merkel-queen-germany-shes-missing-prince-1093286340
02:44 minutes
Tags: angela merkel, cdu, chancellor, coalition, conservative, csu, election, emerging market, exports, fdp, german, germany, government, growth, historic victory, majority, merkel, political bloc, politics, saxo bank, saxo tv, social democrats, social tensions, steen jakobsen, third term, tradingfloor.com, video