It’s been a rough month for the global populist uprising.
First Geert Wilders put up a disappointing performance in the Dutch elections and now, apparently under pressure from Jared Kushner and his daughter Ivanka (and no, we’re not joking), Donald Trump looks set to hand Steve Bannon a pink slip.
Make no mistake, if Steve Bannon is ousted from Pennsylvania Avenue it will be a notable blow to the populist cause. Bannon (and of course Breitbart) is the torchbearer for the semi-global effort to supplant Western democracy and its commitment to globalization, progressivism, and multiculturalism. If Trump boots Bannon, that cause takes a major hit.
Well, in a testament to the fact that populism’s star may be fading, BofAML’s latest European credit investor survey shows “populism” plunging in the race for the dubious “investors’ biggest concern” title. For HY investors, it’s no longer even on the radar.
April’s survey shows that “populism” has been rapidly brushed aside as investors’ biggest concern. Just 4% now view it as their top concern over the next year, a massive drop from 44% in February. Investors say that the Dutch election shows how populism was a fleeting theme. Yet, with the sentiment pendulum having swung so far in the other direction, we think the credit market again looks vulnerable to another bout of French (or Italian) election uncertainty. Investors’ biggest concern now, though, is “bubbles in credit” (28%) – which we read as “valuations are too tight”. Note the mounting concern as well about rising rates: 13% of respondents say “yields rising” is their biggest concern, while 11% say “a behind the curve Fed” is the main risk.