France and Le Pen
It’s hard to put one’s faith in polls when the question elicits embarrassment or fear of rebuke for the person answering it. That was a good part of the reason pollsters got Brexit and Trump so wrong. There is the additional question of how successful companies taking polls are at reaching the right kinds of people. For example my 10 year old loves taking online polls because she wants to feel her opinion matters but I can think of nothing more boring. What then for France and the National Front?
The National Front has roots in the detested Vichy collaborative government that ruled half of France during World War II and has fascist/anti-Semitic/ultra nationalist tendencies stemming from that connection. Even if sufficient numbers of French voters are still sufficiently cautious about voting for a National Front candidate that does not mean polls are likely to be accurate. In additional considering Marine Le Pen’s considerable political talent there is ample potential that she can succeed in reforming the party’s image.
That represents something of a paradox for investors and French government bond yields suggest they are not willing to take the risk. French 10-year government bonds spread over German Bunds have broken out and are widening at the fastest pace since the sovereign debt crisis in 2011.
The Euro is testing its short-term progression of higher reaction lows, evident since the first few days of January and it will need to hold today’s low if potential for additional upside is to be given the benefit of the doubt.
The French CAC Index paused below the psychological 5000 level at the beginning of the year and is now engaged in at least a process of mean reversion. It will need to hold the 4600 level during this pullback if medium-term potential for additional higher to lateral ranging is to be given the benefit of the doubt.
Meanwhile De La Rue, the largest currency printer, has broken a medium-term downtrend and is firming from the region of the trend mean. It might be a remote possibility but perhaps investors are hedging demand for new currencies