Macron Vs. The Coalition Of The Unwilling: It’s HEDJ Time

This weekend’s French presidential election loss by the National Front’s Marine Le Pen was never much in question.

As recently as last week, the victorious Emmanuel Macron was the prohibitive favorite, priced at 1-to-10 odds. Brexit was a much closer race; “Leave” was trailing by only 2 points in referendum-day polls.With similar margins, Hillary Clinton led Donald Trump 48.2% to 46.1%2 in final polling, with Trump ahead by 3 points in a major survey.

The chart below shows why the French vote was not comparable: Macron’s margin was of the landslide variety for months.

Bloomberg Composite Poll of Polls, French Presidential Election

Bloomberg Composite Poll of Polls, French Presidential Election

Here’s a Better Analogy

Macron hope = Trump hope. 

“Trump risk” on November 7 turned into “Trumpflation” by November 9. Same guy, same platform, completely different investment theses. Why? The bull market needed a story, so it came up with one. 

The euro’s 5-cent move to $1.09 in the last five months also needs a story: “Macronflation.”

One of Macron’s problems is that, like Trump’s dilemma, he will find that upending the status quo requires a bold legislature. Trump struggles even with his own party, let alone the opposition Democrats. This poses a problem for the ascendant euro: Macron-induced economic revitalization may prove fleeting because it relies on a conciliatory Coalition of the Unwilling: The National Assembly, France’s parliament.

Macron is about to meet the conflict of his life as he marches headfirst into confrontation with the opposition.

The Euro’s Roadblock

Once a Socialist Party rising star, Macron had to scramble to save his career because he was associated with president Francois Hollande, whose approval rating at one point sank to 4%, just ahead of the bubonic plague.

So he put together En Marche!, his new left-of-center party comprising disillusioned Socialists who wanted to cast non-Le Pen protest votes. But he needs collective togetherness in the National Assembly, not protest votes. Elections are next month.

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Disclosure: Neither WisdomTree Investments, Inc., nor its affiliates, nor Foreside Fund Services, LLC, or its affiliates provide tax advice. All references to tax matters or information provided ...

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