Let the market decide.
I’m normally one to thoroughly agree with that idea. But on Monday morning I woke up to a slew of headlines crowning Emmanuel Macron as France’s next President. It made me feel very, very uneasy. To slip into French, don’t you get that sense of déjà vu?
Before the Brexit vote, market watchers twittered, analysts scribbled, and traders placed big currency bets on a Remain victory. How wrong they were and how angsty markets became for weeks afterwards. Conversely the Trump victory in November last year thoroughly confounded those self-same “experts” who had confidently said Hillary was the anointed one. This time there was money to be made on the Trump market ride that continues to this day – albeit for a host of different economic reasons.
While Macron begs to say he is not part of the French establishment, the analyst and commentariat bubble that “informs” the media narrative has been quick to dismiss Marine Le Pen’s chances of reaching the Elysee. There is no counter commentator left, it seems. The expectation is of a 20 point lead for Macron in the final round on 7 May. And so bank stocks in France and Italy have soared and the France-German bond yield spread has narrowed. The bubble has truly landed for Macron.
If he is savvy – and he is – Macron should be loathing these endorsements. They can only play into Le Pen’s hands in the long term. She is now busily painting him as the establishment banker who cannot possibly understand ordinary people’s concerns, backed up by his market friends who are betting against normal families.
More than that – and quite rightly – voters don’t like being told their votes don’t count. A belief that the establishment would stitch up the result, I believe, was a clear motivator for Leave and Trump voters last year.
I’ve done some number crunching and am set to do some more before the second round of voting. Likely to make the “experts” even more comfortable in their narrative, the obvious electoral parallel to consider is the 2002 French presidential poll when Jean-Marie Le Pen faced off against Jacques Chirac. Seeing his vote balloon from 19.88 per cent in the first round to 82.21 per cent in the second, Chirac won hands down. “Papa” Le Pen saw his vote go up a mere 0.93 points.
But in this very different era, Marine Le Pen is expected to boost her vote by up to 17 points – perhaps more.
Let me be crystal clear. Le Pen would be a disaster for France, for Europe and for geopolitics. So the only rational choice is indeed Macron against some vile policies from his opponent. But the crowing from the commentariat that the second round is a coronation does no one any favours. Pumped up expectations for a President without a party who may be unable to wield power will not be a good thing.
The establishment and the market feel like they have got their man. Time for some humility all round.