Just when things were going so well in Europe, Macron dissolved the National Assembly and called for a legislative Election (This came after he was destroyed by Le Pen’s National Rally party in the European Parliament elections).
This Election is setting up to be a battle between the “Far Left” and the “Far Right”. More like the “Far Joke”! These labels are rather ridiculous in France because both parties ultimately want to spend spend spend, reverse Macron’s reforms and tax the rich (I guess the distinction between “Far Left” and “Far Right” nowadays is just to clarify whether you love or hate “foreigners”).
The fear of the “Far Left” or the “Far Right” caused a sharp drop in the French Index which is called “Le CAC-40”, prompting calls to rename it to “Le CACA-40” (it’s Father’s Day today, so I will go wild with Dad Jokes!). This drop led to €150bn of Market Cap wiped out, which is the equivalent of a 5% drop in NVDA. If that ever happened in the US, it would lead to riots in the streets and calls for Fed Intervention.
The latest unrest also caused a spike in the French-German 10 year sovereign spread to levels not seen since 2016 (Brexit) and 2011 (Grexit).
Here at Shrubstack we like to look on the Bright Side: at least now the French government bonds are yielding the same as Portugal at roughly 3.1%. After all, isn’t that what the European Project was all about? Convergence?
Anyway. I look forward to spending my summer worrying about FREXIT and EURO PARITY. This is why Europoors can’t have nice things.
French Elections In Memes
Lets have a quick lesson in French Politics in Meme format:
France has the best Macarons in the World. It also has a President called Macron, who just called the Election. Next to Monsieur Macron, is Mister Cameron, the ex-Prime Minister of the UK. Mr Cameron also did something stupid. He called for a vote on Brexit and lost, thus condemning his fellow countrymen to long queues at EU passport controls with a maximum stay of 3 months in Europe, so that they suffer through British summers in … Britain.
Macron’s political arch-rival is Marie Le Pen, the leader of the National Rally, which is deemed to be a “nationalist” party but in reality has a socialist agenda. Incidentally, the French word for “rabbit” is “Lapin”. Next to Le Pen is the Overlord of the Financial Markets, Janet Ye-llen.
In this electoral battle between Macron, the Far Right and the Far Left, the victor gets Paris. Since both the Far Right and the Far Left have populist agendas that depend on free money, whether it’s one or the other that ends up forming a coalition, the rest of us Europoors will just get Euro Parity.
“Shrub”, you may ask, “Why did you include Yellen in the Memes?”
Quite simple really. Yellen is the winner out of all this mess. Watch and learn…
Since Macron’s call for Elections, the Euro Stoxx Index is down 5%. Where did the money go? THE US! The Nasdaq is up +3% since.
Even long-duration Bonds (TLT) caught a bid, up +3.5% since the French Election was called and that’s the Wall Street equivalent of a Xmas Miracle, given how badly bonds have been trading.
Which brings us to Yellen, the greatest Financial Mastermind of our Generation. You thought you wouldn’t buy her Bonds didn’t you? Guess again…