The AfD won a state election in Germany. Exit polls confirmed it. Historic, they said. Far-right, they added, in case you forgot how to feel about it.
Chancellor Friedrich Merz has been chipping away at the AfD's popularity the way a man chips away at a glacier with a plastic spork. His strategy appears to be losing more slowly. Inspiring stuff. The vote was described as a barometer, which is the word journalists use when they want to sound scientific about guessing what happens next.
Retail traders saw the headline and immediately began pricing in European political instability, which is like pricing in rain in Seattle. They pulled up charts. They drew lines. They convinced themselves this changed something about their positions. It did not. The euro moved. It always moves. They will claim they predicted it.
The AfD posted historic results in a German state election, and somewhere a portfolio manager is explaining to his clients why this affects their allocation strategy. It does not. The same people who panic-sold European equities last year because of some other election are now panic-buying them because of analysis they read on a website run by a guy named Kyle. Kyle has never been to Germany. Kyle thinks Saxony is a type of cheese.
Merz's government tried to chip away at their popularity. They chipped. The AfD won anyway. This will be described as a warning sign, a wake-up call, a pivotal moment. It is none of those things. It is one election in one state in a country where most Americans cannot name three cities.
But sure, adjust your stops based on German regional politics. That will definitely be the trade that finally makes you whole.
Photo by Christian Lue on Unsplash
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