Europe Puts Lagarde Up
Out with the Italians. In with the French. When economic growth needs a kick in Europe, enter Christine Lagarde as lead nominee for President of the European Central Bank (ECB). Replacing Mario Draghi, Lagarde is tasked with navigating uncertain international cross-winds as she pulls the levers of inflation and interest rates. Big responsibility. Let’s take a look at her resume.
Christine Lagarde boasts third place on the Forbes list of the World’s Most Powerful Women. Impressive. That’s an accolade earned through her last job as CEO of the International Monetary Fund. She acted “tough” in the role according to Dutch Prime Minister, Mark Rutte, who remarked, “I wouldn’t like to be the European country who needs to go to the ECB asking for favors.” If those words are to be believed, European stock markets could sit on firmer foundations by the end of her reign.
However, don’t let her French elegance completely bedazzle you. As Mark Haefele points out from UBS Global Wealth Management, Lagarde will become the first ECB president without any experience in monetary policy. Not to mention the fact that it was only three years ago when she was found guilty of handling a fraud case negligently at the IMF. Sacre bleu! She probably thought this day would never come.
And yet, here she is. For a woman who wrote “please, no math” in her school yearbook testimonial, some believe she’ll have her work cut out keeping the European economy buoyant. Market-watchers, however, are already branding her as a “dove,” with insiders tipping her to use whatever wriggle room she can to optimize business conditions. That’s precisely what investors like to hear, but remember, there’s always too much of a good thing. Get ready for a very interesting era for European stocks.
