Here's a name you may have never heard before: Andreas Vosskuhle. He's the 48 year old President of the Federal Constitutional Court of Germany, making him the Deutscheland's equivalent to our Supreme Court Chief Justice John Roberts.
Traders are familiarizing themselves with this name because Herr Vosskuhle is about to make your day, legal scholars say, assuming you have any exposure or interest in preserving the status quo and restored prosperity of the Eurozone.
"This is a momentous decision, not only for Germany, but really for the continent, for Europe, and for the global markets when you think about it," says Kenny Polcari, managing director at ICAP, in the attached video. So large is this ruling that the NYSE-based trader facetiously wonders "how much sleep has this guy gotten?"
While the stakes are clearly high, what the court is actually ruling on is whether Germany's participation in, and backing of, efforts to rescue neighboring Eurozone countries is within the boundaries of its laws and treaties. Officially, it's whether the ESM (European Stabilization Mechanism) that is being overseen by Mario Draghi and the ECB can buy the sovereign debt of beleaguered member states.
"Any sense that Germany does not support this, or the high court rules against this, will certainly create panic in the market place," Polcari says, before asking "what do they do? there's no back up plan at the moment."
Of course any court decision is unpredictable, but that doesn't mean traders are going to wait around for the answer. No, whether it's stock, bond or currency markets, conventional wisdom is that Vosskuhle and his colleagues will uphold the plan as it stands.
"The risk is missing this to the upside," Polcari says, even though the court may put some restrictions on it. "All and all, we suspect that the response will be positive, and I think that the markets will start to move higher."
- Politics & Government
- Federal Constitutional Court