Rare image of the constitution of the new Government in France
Source: RadioLondres
Macron’s Rise and Fall in one chart: at first, he kicked out opposition coming from the traditional right and left parties.
Fast forward to 2024 and the parliament is in gridlock with Macron's Renaissance being stuck between left and far-right. French assets could feel more pressure in the near-term -- even in the case of a hung parliament -- after the Nouveau Front Populaire came out on top in a second round of parliamentary elections. Its fiscal expansion and anti-business program could push the French-German yield spread back toward 80-85 basis points and weigh on all companies with a large exposure to hashtag#France. Source: Bloomberg
Biden sent this letter to congressional Democrats on Monday morning saying he is 'firmly committed to staying in this race.'
Here is the reaction (this is a 5-minute chart of Predictit betting that Biden is the nominee) Source: James Bianco, Bianco Research
Great column in the FT
France and Britain are changing places "Britain and France are sitting on opposite ends of a political see-saw. Three days after the UK elected a pragmatic, centrist government with a huge majority, France went to the opposite extreme. Sunday’s legislative elections have produced a deadlocked parliament, with both the far right and the far left gaining ground. (...) Relief that the far-right Rassemblement National performed worse than expected in the second round of voting cannot disguise the fact that the centre ground in French politics is shrinking — and with it the authority of President Emmanuel Macron. The calm of London on election night last week contrasted strongly with the fevered atmosphere in Paris on Sunday evening. (...) it may be many months before France has a government that is capable of delivering a coherent response on European questions. That will be a problem, not just for Britain but for the whole of the EU," LINK TO THE ARTICLE >>> https://lnkd.in/eaMy_zCQ
The far-right RN was defeated yesterday but the problem is far from over.
They got 37% of the popular vote. 37% !! The "winning left" got 26%... Note 2 things: 1) The specificities of the French lower house voting system: One party rises from 33% to 37% between the 2 rounds and move from rank #1 to rank #3. Another one (left / far left) declines from 28% to 25% a move from rank #2 to rank #1 2) If you take out far-right RN and far-left/left, the true "traditional / establishment" parties are less than 30% of votes... (despite unprecedented turnout) Source image: JohannesBorgen
A month in French politics...
4 weeks ago, Marine Le Pen’s National Rally party won EVERY single French department except for Paris in the EU Elections. Yesterday, Marine Le Pen’s National Rally party came 3rd... How to explain this? - The specificities of the lower house voting system (2 rounds) - The coordinated anti-RN strategy, under which the left and centre tactically withdrew their candidates from run-off ballots - Or just an ungovernable country?
France was going to choose between debt, more debt and way more debt.
Way more debt it is. Fascinating. Deficit and debt projections via Bloomberg Source: Daniel Lacalle
French politics: 📢 Absolute shock result for the legislative elections 📢
The left-wing New Popular Front (NFP) is set to come in FIRST, and Marine Le Pen’s far-right National Rally in THIRD in absolute shock result for the French legislative elections. Within NFP, radical left LFI leader J.L Melenchon wants the current Prime Minister to leave and rules out any coalition with the centrists (i.e he claims the Prime Minister seat for him or someone else from LFI) We note that within NFP (left-wing), the socialist party PS and the Greens have a strong score relative to radical left LFI. As such, it is unlikely that LFI will be able to claim the Prime Minister seat. Three scenarios: 1/ NFP government (with a Prime Minister coming from the less radical arm of NFP); 2/ A center-left coalition government (Macron’s Ensemble + less radical left + green).; 3/ If no political solution is found, a caretaker government could be appointed, OR instead a so-called technocratic government led by a non-political prime minister. All-in, the result is rather negative for markets (equities and bonds) as the radical left & left NFP party program is somewhat of a flash-back into the old French socialist program: - Retirement age at 60-year old - Increase of the minimum salary - Increase of taxes Such a political program would obviously be both inflationary and increase debt load and budget deficit. Still, it remains unlikely that left & radical left would be able to impose this program as their majority is a relative one. All in all, we do expect some sell-off of French equities and a rise of the OAT-Bund spread tomorrow. With regards to the new PM and the economic & social program to be applied, next few days will be critical (unless they postpone any decision after the Olympic Games...).
