Daily Commentary

MarketMinder’s View: Please note, MarketMinder is nonpartisan, preferring no politician or party over another. Our discussion of politics centers on the economic and market implications only. With Japanese Prime Minister Sanae Takaichi reportedly set to dissolve the lower house of parliament and call a snap election (likely in early February), the opposition is mobilizing. The Constitutional Democratic Party of Japan (CDPJ) and Komeito (which has historically had strong ties with Takaichi’s Liberal Democratic Party) plan to cooperate in the election by forming a new, currently unnamed party. “CDPJ and Komeito members in the lower house will leave their parties and join the new party. Such procedures will be conducted next week, [CDPJ President Yoshihiko] Noda said. [Komeito leader Tetsuo] Saito said Komeito agreed to withdraw from races in the single-seat constituency segment of the lower house election, including the four constituencies currently held by Saito and other Komeito lawmakers, once a new party is formed.” This development is noteworthy since voters choose their local candidate (not the party leader), making party affiliation a critical consideration. Consolidating the number of choices could make it easier for the opposition to win votes—important to note, as part of the reason Takaichi seems set on a vote so soon is to avoid giving the opposition time to organize and campaign. But as the conclusion also notes, establishing a new party in a short campaign season is a tall order. Logistically, some voters may not know which candidate their vote supports! So Japan does face some short-term political uncertainty here, but because the election will likely occur in weeks rather than months, those unknowns should dissipate quickly. For more, see yesterday’s commentary, “Sanae’s Snap: Elections Incoming in Japan.” 

MarketMinder’s View: The reaction to 2025 German GDP growth indicates sentiment remains quite dour toward Europe’s largest economy. Adjectives like “troubled” and “modest” overshadow a simple point: German GDP grew last year (0.2% for 2025 and 0.3% q/q in Q4). This article credits solely government spending, but household spending rose nearly as much—and a lot of the government’s outlays weren’t stimulus, but healthcare-related. (Source: German Federal Statistical Office.) In keeping with that pessimistic tone, the article reports growth expectations are rising this year, but mostly due to Chancellor Friedrich Merz’s infrastructure and defense spending program. That vastly overrates the government’s ability to drive growth—not that we think such a boost is necessary. Look, we agree Germany’s economy isn’t gangbusters and faces headwinds (e.g., tariffs and competition from overseas). But from an investment perspective, “meh” growth has exceeded expectations of a deep, extended recession—a reality markets have long since recognized. Even if GDP continues to putter along this year, that may be enough to pleasantly surprise based on the current views of the German economy. For more, see our December commentary, “A 2025 Political Lesson to Take to 2026.”    

MarketMinder’s View: UK monthly GDP grew 0.3% m/m in November—better than experts’ projection of 0.1%—despite all the uncertainty surrounding Chancellor Rachel Reeves’s widely anticipated Budget. Look, as the article notes, one major automaker’s resumption of vehicle production following a late-summer cyber attack boosted vehicle manufacturing (and the production sector grew 1.1% m/m)—which is likely a fleeting boost, but also one that reverses earlier drags. Setting that skew aside, services, which make up the majority of UK economic activity, grew 0.3%, continuing a string of growthy reads. So both the relief here and earlier pessimism seemed a little overdone to us. Interestingly, “In a hint that the unusual level of speculation in the run-up to Reeves [sic] budget may have been good business for some, the ONS said the largest contribution to service sector growth came from ‘professional, scientific and technical activities’ – noting in particular strong growth in accounting, bookkeeping, auditing and tax consultancy.” That is a curious twist, although it is far harder to tally the growth or investment that sat on the sidelines, awaiting clarity on the Budget. But for all the warnings we read about Budget-related uncertainty hurting the economy, it does appear UK services firms have kept chugging along even at the height of uncertainty. For more, see our November commentary, “Few Surprises: Leaks and Trial Balloons Mute the Market Effects of Britain’s Tax Shifts.”