On Thursday the Riksbank likely ends its negative rates experiment that started in 2015. The move is controversial as the Swedish economy is struggling, but a clear sign that the Riksbank is judging that negative rates on the margin is more harmful than beneficial to the economy and society. If the move to zero goes well it could lead the way for the ECB to change its policy mix as the ECB president Lagarde has indicated she would like to see. For now, Swedish equities have not lost out to European equities as the policy rate differential has widened over the past year. On the economy, it’s too early to conclude anything other than the Swedish services PMI figures plummeted to 47.9 in November the lowest reading since the euro crisis. With a positive 0.5% fiscal budget to GDP the Swedish government has a massive room for expanding the fiscal spending and offset any external or rate driven weakness. With Sverigedemokraterna gaining in the polls we believe the government will be forced to do massive fiscal spending.