The French Bond market threatens to become a crisis as yields widen and its’ politics look increasingly a zero-sum game. While we’ve been watching the antics in DC and the price of oil due to Iran, we’ve missed how swiftly a new European debt crisis has been brewing. If it deepens, it won’t be a simple repeat of 2010-12, which nearly crushed banks and triggered defaults. Europe’s second largest economy in crisis, and dispute with Frankfurt, could trigger even more massive instabilities.

The debt crises that apparently threaten to engulf Paris and London are very, very different. Paris is in genuine financial and market trouble. London has a perception problem.

Both crises are rooted in political/fiscal miscalculations and the widening polarisation between political populism and conventional politics. The crisis in Paris is very real, but the one in London is largely driven by Doom-Scrolling financial misdirection of doubtful right-wing provenance, looking to snipe the centrist Labour govt.

Gold has been an absolute portfolio star this year. It’s ridden the markets rising fears on sovereign debt, inflation and political incompetency. What will drive it back down? It seems unlikely fears will lessen, especially if predictions of rising instability and stagflation prove founded.

The UK’s Torygraph Newspaper excelled itself over the weekend, publishing claims the UK is bust and seeking an IMF bailout. Their readership loved it as proof positive the UK is doomed and how terrible the new government is. It undermined the Gilts market, and raised substantial global investor fears over the investibility of the UK. The story was utterly unfounded.

The German elections highlight the dangers of coalition politics – swimming in a sea of treacle to agree policy choices as the likelihood of bad compromises rises. Even as Trump and Ukraine roil and destabilises the European Union, Germany is set for the distinct possibility nothing much changes. It is not strong and stable leadership at a time when it is desperately needed.

Politics was an overarching theme in 2024 – and, regrettably, will remain so in 2025 as global investors figure out likely policy action by central banks and the growth outlook for 2025. “This time it’s different” (TTID) and FOMO remain the most malign forces acting on asset prices, but is a new full blown European Sov Debt Crisis also on the cards?

 Who would possibly want to be a billionaire? Hated by the mob, a victim of evil governments holding you back with tax threats while denying your basic human rights – like a platinum gold bank account! Give me poverty anytime…

Valuations in the USA look insane. Surely stock prices must be a bubble? Maybe. Maybe not – the USA has created a self-driving technology machine, a conveyor belt of tech innovation that’s set to continue delivering value and corporate profits. To understand it – ditch traditional thinking about economies.

Europe is getting “interesting” in the Chinese sense of the word. The market to watch will be European Bonds – French OATs may just be the first to wobble. As the crisis unfolds (and it will) there may be opportunities to arbitrage the actions of the ECB to stem any crisis – watch this space.

Mario Draghi saved Europe in 2012. Yesterday he unveiled a new plan long on words and familiar ideas. Europe is aware it is approaching economic crisis – but prescribes the same old solution of Closer Union. It’s time for Europe to so something radical or become irrelevant.

Plus – UK win stage 1 of the America’s Cup.