Y “€ur” Know Soon Enough

French voters face a stark choice in Sunday’s presidential election between joining the wave of populism that has swept across the European and American political landscape over the past year or an attempt to renew the governing principles that have guided their country for decades, albeit via a 39-year-former untested Socialist turned Centrist.

With the nation’s traditional governing parties eliminated in the first round, this election campaign has already caused great uncertainty, although you wouldn’t know it from the polls, which have consistently placed the centrist Macron as the next French President, despite the polls seen to be wanting ahead of the Brexit and Trump “surprises.”

Il ne faut pas vendre la peau de l’ours avant de l’avoir tué,” translates into “don’t count your chickens before they’re hatched.” So what could cause an upset?

The turnout level will be key to the outcome, particularly with over 40% of the first round voters no longer having a candidate in the race. Will they now vote in line with the polls or will they not bother voting at all? Adding to this uncertainty is that Monday is a French public holiday, V-E day, hence many may prefer an extended week-end break?

Neither of the B & T events were a surprise to Socionomists’ as it’s the collective social mood that will decide the outcome, as mood governs events, with a Nation’s stock-index being the best “barometer” of the mood.

So without further ado, what is the French CAC 40 “saying:”

We look to the charts, as charts never lie, albeit that the French barometer only represents 40 underlying blue-chip stocks, but from it we can observe the following:

 

  • The CAC has gained 25% over the past year, retaining the green buy panel and confirming the “mood” as increasingly positive, supporting the “incumbent” had he been standing, but now Macron, the closest “fit” to him, being the Socialist Party deputy secretary-general and the Minister of Economy, Industry and Digital Affairs under François Hollande’s government from 2012 – 2016, when Macron resigned.

 

 

  • Note also the “gap,” highlighted by the red arrow, and the increased distance between the index and its 50-day moving average, which suggests a likely 7% correction towards the 5000 level.

 

 

So this supports the probabilities of a Macron victory on Sunday, with a likely stock-market correction shortly thereafter.

 

The €uro has been under pressure for all sorts of reasons, including the very threats to its existence and to the whole EU project, following the rise of populism. But as with their stock-market counterparts, currency relationships “wax and wane” to the beat of the collective social mood and are patterned because of this:

 

A 2-year study of the Eur/$US demonstrates this, showing a 1-year sideways trend following an earlier steep fall. Furthermore, the YTD rally for the € (neutral and buy panel) helps explain the “cock-a-hoop” reaction from the EU establishment following the recent Dutch election, including the “hard-ball” rhetoric now employed against Britain in respect of it’s EU exit.

For guidance on the fortunes or otherwise for the €, stocks and geo-politics in general, you may wish to visit HERE, HERE and HERE.

 

 

 

 

 

 

 

 

 

 

 

 

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