What's Next For President Macron

As noted earlier, following Macron"s victory the reaction in key FX crosses and pairs has been very subdued, suggesting today"s outcome was no surprise to traders at least in terms of technical positioning. Another reason why "the news may be getting sold" is that as Deutsche Bank and various other sellsiders suggested, another near-term hurdle looms in just a few weeks time with the French parliamentary elections.

Other immediate deliverables include naming a prime minister, forming a government, passing labor market reform, and negotiating Brexit. Here is a breakdown of what the immediate next steps facing the youngest ever French president are, courtesy of a late Sunday note out of Deutsche Bank.

France: Macron President, what next?

Emmanuel Macron won the second round of the presidential election capturing ~65% of the expressed votes against Le Pen. The turnout was satisfactory at ~75% but lower than previous presidential elections. Also, ~10% of the votes were blank, two to three times the usual share. Ultimately, far-left voters supported Macron more than expected by the latest polls.

This is a disappointing result for the National Front. In 2002, Jean-Marie Le Pen against centre-right candidate Chirac had gathered 18% of the expressed votes in the second round. In 2017, Marine Le Pen gathered 35%. The National Front rise is less impressive than these figures suggest. In 2002, it captured 14% of the electorate once accounting for abstention, and ~23% in 2017.

Macron will now have to name a Prime Minister with parliamentary experience, able to lead the lower-house election campaign and then manage the daily business of parliamentary politics. He mentioned that his PM name and government will be revealed after the inauguration that needs to happen by 14 May.

As we wrote in Focus Europe on Friday 5 May, recent electoral results and polls suggest that Macron"s party could be the main party in the French lower house post 11-18 June elections. An outright majority for his new party "En Marche!" appears numerically possible. If not, a majority could be reached with the participation of moderate centre-left and/or centreright MPs who have already expressed their preparedness to govern with Macron in such a situation. In the coming weeks, Macron will be hoping to convince them to directly join his party, while they may be very reluctant to take the risk.

In terms of reform timetables, Macron aims to pass labour market reforms quickly over the Summer 2017, take more time to pass unemployment reforms at the end of 2017 and take a longer perspective on simplifying the retirement system (see here for details).

Regarding Brexit and the EU, Macron has run on a pro-EU platform and has repeatedly explained his ambition to make France an equal partner to Germany. He will most likely prioritise the relationship with Germany over Brexit. A victory by Macron at the presidential election is unlikely to lead to easier negotiations for the UK.

Lowest Turnout Since 1974 As France Decides The "Future Of The EU"

Update: as of 5pm, the French voter participation was 65.3%, which is the lowest in presidential elections going back at least all the way to 1988:

• 2017 : 65.30%


• 2012 : 71.96%


• 2007 : 75.11%


• 2002 : 67.62%


• 1995 : 66.07%


• 1988 : 70.63%

And according to a separate accounts, the voter turnout was the lowest going back all the way to 1974.

#Presidentielle2017 : participation à 65,3% à 17:00. (71,96 % en 2012 et 75,11 % en 2007)./Ministère pic.twitter.com/YYAHgjEBrz

— LesNews (@LesNews) May 7, 2017

An estimate by elabe/BFMTV estimates the final voter turnout at just 74%, which would make it the lowest since 1969.

Estimate for final voter turnout - 74% (@elabe_fr/@BFMTV) lowest since 1969.
2012 - 80.35%
2007 - 83.97%
2002 - 79.71%
1995 - 79.66%

— Andrew Connell (@andrewiconnell) May 7, 2017

* * *

According to the French interior ministry some 28.54% of registered voters have cast their votes in the presidential election by 12:00 a.m. local time (1000 GMT) on Sunday, a lower than expected initial turnout and the lowest at this stage of the day since the 2002 presidential poll, when it was 26.19%. Prior midday turnouts were 30.66% and 34.11% in 2012 and 2007, respectively. A final turnout of 75% is expected at this election; the eventual turnouts in 2002, 2007 and 2012 were all above 80 percent.

Voter apathy did not prevent both candidates from voting for themselves, however, and both did so early on Sunday.

Emmanuel Macron casts his ballot at a polling station in Le Touquet, France.

Marine Le Pen casts her ballot at a polling station in Henin-Beaumont, France.

While parallels with the US election in November have suggested that a low turnout may have an adverse impact for Macron, it remains unclear who is the biggest winner from French voter apathy. Pollsters have said abstentions would be highest among left-wing voters, disappointed by Sunday"s choice after nine other candidates were eliminated in first round, but it is unclear what a high or low turnout could mean for the outcome. That said, even a modest boost for Le Pen based on early voting patterns would likely be insufficient if latest polls are an indication: Macron was set to win the head-to-head with between 61.5 and 63 percent of the vote, according to the last opinion polls on Friday

As two weeks ago, polling stations at France"s European continent opened at 8 a.m. (0600 GMT) and will run for a maximum of 12 hours. Those in the largest cities will close at 8 p.m. (1800 GMT). In France"s oversea territories, the voting was held on Saturday. Over 47 million French voters are registered to cast their votes at some 69,000 polling stations.

The stakes are familiar: as Reuters puts it, "Macron, who wants to deregulate the economy and deepen EU integration, is set to win the head-to-head with between 61.5 and 63 percent of the vote, according to the last opinion polls on Friday. Should an upset occur and Le Pen win, the very future of the EU could be on the line given her desire to close borders, dump the euro currency, and tear up trade treaties."

In an analysis posted yesterday, famous French investor Charles Gave said that even a Macron victory would result in "total mayhem" in France as the resulting parliamentary elections would likely lead to broad governance chaos. Furthermore, even a defeat would be seen a victory of sorts for Le Pen: the 48 year-old"s vote is likely to be about twice what her party scored the last time it reached the presidential second round in 2002, demonstrating the scale of voter disaffection with mainstream politics in France.

Markets, meanwhile, are confident a Macron victory is assured.

"We increased our equity exposure and added some French stocks after the first round," said Francois Savary, chief investment officer at Geneva-based fund management firm Prime Partners. "The major political risk of a Le Pen victory appears to be disappearing."

After a campaign in which favourites dropped out of the race one after the other, Le Pen is nevertheless closer to elected power than the far right has been in France since World War Two. If opinion polls prove accurate and the country elects its youngest-ever president rather than its first female leader, Macron himself has said himself he expects no honeymoon period.

Macron"s task will be difficult: up to 60% of potential voters for the young politician have said they will do so to stop Le Pen from being elected to lead the euro zone"s second-largest economy, rather than because they fully support the former banker turned politician. "I don"t necessarily agree with either of the candidates," psychotherapist Denise Dulliand, who was voting in Annecy in the mountainous southeast, told Reuters. "But I wanted to express my voice, to be able to say that I came, even if I am really not satisfied with what is happening in our country, and that I would like to see less stupidity, less money and more fraternity." Should Macron disappoint, it is quite likely that the fickle electorate will turn quickly against Francois Hollande"s former cabinet member.

Whether Macron"s supporters will get their wish to see Le Pen lose, will be revealed at 8pm local time, when the first exit polls are disclosed.

Meanwhile, investors are already setting their sights on the upcoming French parliamentary elections next month in which the new president will try to secure a majority in parliament. According to Reuters, much will depend on how the candidates score on Sunday. Le Pen"s niece, Marion Marechal-Le Pen, on Thursday told L"Opinion daily that winning 40 percent of the vote would be "a huge victory" for the National Front, something Charles Gave echoed yesterday,who said Le Pen"s daughter is poised to be a formidable force in 2022 presidential elections.

In any case, whoever wins, the result will be "historic" and will open a new chapter in French politics, with both French legacy parties, the Socialists and The Republicans that have ruled France for decades, swept away from the chance to retain power for the first time in decades, in an embarrassing defeat in which the French population denounced an establishment status quo that has failed them.

Why Charles Gave Expects "Total Mayhem" In France Even If Macron Is Elected

Venerable French investor Charles Gave has been managing money and researching markets for over 40 years; as such France’s elder statesman of asset allocation perhaps best captures the mood ahead of the most crucial Presidential election in a generation. In conversation with Dr. Pippa Malmgren, Charles breaks down national politics to understand why voters have rejected the establishment and the market impact of both outcomes, and what to expect from tomorrow"s election.

First, Gave, who says "I"m not so sure that Macron will win", is asked by Malmgren to walk RealVision viewers through what Macron"s agenda would look like in case of a victory. Gave is unable to do so for several simple reasons:

Well, first, nobody knows. Because during the whole campaign, all these talks were on one hand, on the other. I"m in favor of apple pie, and motherhood, you see. Basically he has, to my knowledge, very little program. So he"s running. That is what Hollande said. That he was going to make some fundamental changes without hurting people. And so Macron is a big, empty suit. That"s what he is. You did the right curriculum vitae, he went to the right schools. And you have the feeling that the guy never had an original idea in his life. He was always a good student.

And moreover, there is a strong suspicion that he"s a kind of golem created by Hollande and all these guys. So since they knew they were going to lose the election, they created a guy in a hologram that would run for them and prevent them from losing power. So to a certain extent, the French political system has been captured by what you can call the Technocratic class. And whether from the left or the right, it didn"t make any difference. And this Technocratic class is presenting Macron as a brand new fellow. He is nothing brand new. These guys have been in power for 50 years for God"s sakes. So this is basically nothing.

Gave is then asked for his take on the market"s reaction, first to the outcome which now appears to be fully priced in, i.e., a Macron victory. The French investor"s response should be concerning to those who believe France is in for a period of calm and stability.

If Macron is elected, as I already said, I"m not sure it"s not going to be a triumphant election. So I"m not sure they will have that much legitimacy at first. And second thing is that just after, we have the election for the French Parliament. And then it"s going to be a total mayhem. Because you have four main different currents in France. The extreme left, the Macron left, you see? You have the Fillon right, and you have Le Pen"s right. So you have four. The way it"s done before is that you had only three. Extreme left and the left were joined. And you had the election, you had three guys, and if anyone from the Front National had any chance of being elected, then the worst position of the other two retired. Right away. And said, you must vote for my usual enemy, but we don"t want to. It’s what’s called the Front Republic.

But you see, it"s kind of easy to organize if the organization of the parties are very strong and can force people to retire and to stop running. But if you have four, the organization of the parties having lost all credibility, then nobody is going to retire. Until we are going to have elections. And you could have a majority of MP"s from the Front National The majority of MP"s from Melenchen. Anything is possible. So the fact that Macron is elected doesn"t reduce at all. Not at all. The political risk in France. It may reappear at the election time, big time. So anybody who buys on the idea that the problem is solved in France, let’s move to the next one will have to wait till the middle of June.

Alternatively, what if Le Pen wins:

If Le Pen wins, it"s pretty simple. The bond market in France, Italy, Spain cannot open on Monday morning. And I suppose the euro is dead in the following week. And then you have to buy Europe like crazy. Southern Europe.

Why Southern Europe? Because it is Germany"s markets that would bear the brunt of the selloff, as the dissolution of the euro and European Union would effectively bring about the end of Germany"s economic hegemony (while at the same time benefitting France).

The Germans have made a colossal mistake, which is that they have all the production in Germany. So they"re extremely efficient, well-organized, and they have developed massive current account surpluses. Half of that surplus is in cars. The margin on cars is around 4%. Imagine that the euro breaks down. The deutschmark comes back. The deutschmark goes up 15, 20%. And the whole German industry, all the production base in Germany, becomes bankrupt in no time at all. Compare that to France. France we have magnificent big companies that have been intelligent enough to produce everywhere in the world, to operate from everywhere in the world, and be totally independent from what"s happening in France. What they have in France is their headquarters. And that"s about it. So if Europe breaks, you should be long France on the stock market, and short Germany. Big time.

Would a Le Pen victory also mean the end of the EU? Gave answers:

I wrote a book in 2002, sometime around then, called "Lions Led by Donkeys in France." It was kind of a bestseller. And I made the point in the book that the euro is going to destroy Europe, the European institutions. And I said, we must get rid of the euro to save Europe. So name of the game, if we have some kind of a crisis like that, is to basically close the market for three weeks and organize an orderly dismembering of the euro. But to maintain what has been good so far, which is the kind of common market. And it"s a difficult call because the movement towards the euro was also a movement to create a European nation.

And so the institutions today are basically federal in nature. But nobody in Europe has ever voted for them. So to a certain extent, the guys with power in Brussels have not been elected by anybody, and you cannot fire them. So it"s totally Technocratic. So we have a hell of a problem. We should not only destroy the euro, but should move back to what Europe was in 1988 or 1987 before they put all these Federalist legislations in. That is going to be a tall order. But if the euro disappears and Europe has a problem, then the negotiating between the UK and Europe is going to be amusing. Because UK is going to say, look, who are we going to negotiate with?

Finally, on his big picture thoughts ahead of tomorrow"s decisive election:"it"s going to be a close call, a lot closer than people think. And then we have the elections afterwards, which are going to be a total gamble." Gave adds that in a sense Le Pen has already won because the "worst case scenario" for her, the 2022 elections, is still achievable. As for the parliamentary elections, "Le Pen could have anywhere between 40 to 100 MP"s (she currently has two).... which would be a total disaster for the ruling class."

In other words, even if Macron triumphs on Sunday, "the National Front isn"t going anywhere." Furthermore, Le Pen"s niece Marion Le Pen is poised to inherit the mantle of party leadership in time for the next presidential election in 2022. The younger Le Pen, already a French MP, would have a distinct advantage over her astringent aunt:

Marion, she"s very young. She"s 27, 28. She"s an MP in the French Parliament. She"s extremely pretty. And she represents what"s probably very good in the French Catholic Right. She"s very much a Christian person. Very much so. So a lot of people have problems voting for Mrs. Le Pen today. A lot of the Fillon"s elector would have absolutely no problem voting for Marion, you see what I mean? So she has a big appeal on the Classical French Right. Big one. Big one.

His parting words:"be careful. If she wins, you will have a disaster in the lot of the European bond market. Doesn"t mean a total disaster for the good quality companies. But the risk is not on the stock market. The risk is on the bond market. So be careful. Don"t overstay on the bonds in Europe."

While these are the core excerpts from the interview with Charles Gave, there is much more in the full 40 minute version found on RealVision TV.

Le Pen on Her Way to “Liberate” France from Globalism

(image: voanews.com)

(The Real Agenda News) Marie Le Pen is officially a contestant for the presidency of France. Le Pen, lived on Sunday, the most important night of her political career. The leader of the National Front (FN) did not only get that much closer to moving into the Elysee, but she has also advanced the political project handed down to her by her father Jean-Marie Le Pen.

During almost all the electoral campaign, her passage to the second round was seen as a given, becoming the rival to beat by one of the other candidates. A defeat probably would have questioned her permanence at the head of the National Front.

The people’s candidate, as presented to her followers, after 9 pm local time, an hour after the closure of all polling stations, celebrated in her fief of Hénin-Beaumont a “historical result and the first stage to take the French people back to the Elysee,” she proclaimed.

Facing her second-round duel with Macron, whom he called “the heir of Hollande,” Le Pen appealed to “all the French patriots” to support her to achieve “a great alternation to liberate the French people” and promised to defend it against “rampant globalization” with her “France First” project. Her plan includes decreasing mass immigration by closing national borders.

Congregated in the François Mitterrand Center, a vestige of a socialist past, the National Front militants had waited for the results with increased tension during the afternoon.

When Le Pen’s pass to the second round was confirmed, the room burst into cheers, hymns and applause, but it was not the great party that Le Pen herself had wanted.

“I am quite happy that she has managed to make it to the second round, but also disappointed by the mobilization of the French patriots,” said Teo Lebland, a 21-year-old from one of the local constituencies.

Even so, the closing of ranks around Le Pen on Sunday was total. In the FN there is cohesion cohesion around the project of Marine Le Pen, including his father, although they have had a disagreement, he has said that he supports his daughter’s project. There is electoral cohesion even if there is a disagreement over ideas.

According to Jean Messiha, leader of the presidential program of Le Pen, the mere fact of being in the second round, something that did not happen in the first attempt, in 2012, is already a recognition to a long work of regeneration.

“The fact of being in the second round is a beautiful reward for this campaign that she has carried out for months, if not years, and today is the consecration of a work that has consisted of convincing citizens of the accuracy of our diagnosis and the relevance of our measures,” he said at Hénin-Beaumont.

I am sure that Jean-Luc Mélenchon and François Fillon would have wanted this victory,” said Hénin-Beaumont’s mayor, Steve Briois, in reference to the other two leading candidates defeated on Sunday. “Marine Le Pen has progressed a lot since 2012, if that is not a good dynamic, I do not know what it is,” he insisted.

But his words did not just convey the security at the National Front, that saw how rival Macron began to receive support from the entire political sphere as soon as the results were known.

They say that if they add up the votes received by some of the “small candidates”, those who went to Jean Lasalle, Nicolas Dupont-Aignan or François Asselineau, more euphoric even than Le Pen, her strength will multiply. But no calculation predicts that it will be strong enough to defeat Macron, who now becomes the only obstacle against French nationalism.

50,000 Police Monitor As 47 Million French Voters Decide The Fate Of Europe

After months of anticipatory build up, voting is underway in France on Sunday in the first round of a bitterly fought presidential election that is seen as crucial to the future of the Eurozone, and a closely-watched test of voters" anger with the political establishment.

Local polling stations opened at 0600 GMT and will close at 1800 GMT, with about 47 million voters expected to cast their ballots in around 67,000 polling stations amid a high terror alert.

Voters, on edge after Thursday"s latest ISIS terrorist attack, will be monitored by more than 50,000 police officers backed by elite units of the French security services patrolled the streets less than three days after a suspected Islamist gunman shot dead a policeman and wounded two others on the central Champs Elysees avenue.

A voté ????#JeVote pic.twitter.com/ZZTw1ZAe7F

— Marine Le Pen (@MLP_officiel) April 23, 2017

A voté. pic.twitter.com/E2DVMIHak8

— Emmanuel Macron (@EmmanuelMacron) April 23, 2017

By noon (6.00 a.m. ET), turnout amid perfect weather conditions across much of France was 28.54%, according to official figures, roughly the same as in the 2012 first round, in which almost 80% eventually took part.

Finally Inside the Lycée in London to vote in French president elex after 2 hours of lines outside And now, more lines. #Presidentielle2017 pic.twitter.com/0UZyzz4EUJ

— Yann Tessier (@Y_Tessier) April 23, 2017

Some polls had been predicting a much lower turnout, closer to the 70% that took the then National Front leader Jean-Marie Le Pen into the second round in 2002. Pollsters are unclear about what a low or high turnout could mean in 2017.

Long queues of French nationals in London waiting to vote in today"s presidential election #frenchelection pic.twitter.com/C4cKFNtp0S

— MarieLouiseGumuchian (@MLGumuchian) April 23, 2017

While we have previewed today"s event extensively (most recently here), Reuters summarized it best: today "voters will decide whether to back a pro-EU centrist newcomer [and a former Rothschild banker], a scandal-ridden veteran conservative who wants to slash public spending, a far-left eurosceptic admirer of Fidel Castro or to appoint France"s first woman president who would shut borders and ditch the euro."

The outcome of today"s election will show whether the populist tide that led to Brexit and Donald Trump"s victory is still rising, or starting to ebb.

The biggest wildcard ahead of today"s outcome is the high level of indecision among the population, with nearly a third of potential voters undecided until the last minute. Hanan Fanidi, a 33-year-old financial project manager, was still unsure as she arrived at a polling station in Paris" 18th arrondissement.

"I don"t believe in anyone, actually. I haven"t arrived at a candidate in particular who could advance things. I"m very, very pessimistic," she said.

Looking at the outcome of today"s vote, while the possibility of a Le Pen-Melenchon run-off is not the most likely scenario, it is the one which alarms bankers and investors.

Putting the performance of Marin Le Pen - as well as that of her father Jean-Marie - in election context:

• Jean-Marie Le Pen, 2002: 16.8%


• Jean-Marie Le Pen, 2007: 10.4%


• Marine Le Pen, 2012: 17.9%

Le Pen has told supporters "the EU will die", while Macron, 39, a former Rothschild banker wants to further beef up the euro zone. Le Pen further wants to return to the Franc, re-denominate the country"s debt stock, tax imports and reject international treaties. Melenchon also wants to radically overhaul the European Union and hold a referendum on whether to leave the bloc.

Le Pen or Melenchon would struggle, in parliamentary elections in June, to win a majority to carry out such radical moves, but their growing popularity also worries France"s EU partners.

Germany"s position on today"s election is hardly a surprise: "It is no secret that we will not be cheering madly should Sunday"s result produce a second round between Le Pen and Melenchon," German Finance Minister Wolfgang Schaeuble said. If either Macron or Fillon were victorious, each would face challenges. For Macron, a big question would be whether he could win a majority in parliament in June. Fillon, though likely to struggle less to get a majority, would likely be dogged by an embezzlement scandal, in which he denies wrongdoing.

Meanwhile, polls opened on Saturday in France’s overseas territories, allowing citizens to cast their ballots a day ahead of voters on the French mainland. According to unconfirmed twitter reports, based on preliminary offshore results, support for Melenchon is far greater than for any of his competitors.

.@BFMTV ????????????#Élysée2017 : La #RTBF publie les résultats définitifs en #Guyane : #Mélenchon 24,72%#LePen 24,29%#Macron 18,75%#Fillon 14,66% pic.twitter.com/5CVZyGmDtn

— ????Le Globe (@LeGlobe_info) April 23, 2017

Occasional live feed from Paris courtesy of Reuters:

Wolfgang Schaeuble: "If Muslim Migrants Don't Like Europe, Go Elsewhere"

Germany"s finance minister Wolfgang Schaeuble did everything in his power to infuriate three distinct groups of people today.

First, in a statement that may infuriate several million German immigrants, Schaeuble said that Muslims who migrate to Europe should understand that there are better places for them to live if they do not want to accept the European way of life.

Such migrants who do not accept Europe"s way of living should be told "you have made the wrong decision", Schaeuble said during a round table discussion in Berlin. "There are better places in the world to live under Islamic law than Europe," he added. It was not clear if he was envisioning the US as one of the fallback plans for the millions of migrants Angela Merkel"s open door policies greeted with open arms in 2015.

Then, taking a veiled swipe at some 7 million Greeks, Schauble said that if European countries want to keep the euro, they must implement the common currency"s framework of joint responsibility.

Finally, taking a shot at a substantial portion of the French population, the finance minister said that Germany needs a strong, pro-European France to hold together the European project, veteran German Finance Minister Wolfgang Schaeuble said on Wednesday, less than two weeks out from the first round of the French presidential election.

The comments from Schaeuble once again confirmed the German government"s revulsion to National Front presidential candidate Marine Le Pen, who wants to abandon the euro currency and is expected to go through to a run-off vote. A success for Le Pen, and a redenomination of the French franc, would lead to disaster for the euro and likely result in a return to the Deutsche Mark, ending the cheap currency benefits Germany gets from participating in the common currency.

"We need a strong France ... we need a pro-European France," Schaeuble said during a round table discussion in Berlin quoted by Reuters. "We need France to hold together Europe."

"I hope Le Pen does not become French president," he added, seemingly unhappy with the democratic process in France.

It wasn"t just Le Pen, however, as Schauble also took aim at the far left: "Le Pen, Melanchon in the second round would be a nightmare", the finance minister added.

On Tuesday, Schaeuble said that polls show French presidential candidate Emmanuel Macron will likely to enter second round voting and win the presidency, and added that he would “probably” vote for former Rothschild banker.

No surprise there.

France votes in the first round of its presidential election in less than two weeks, on April 23, with the top two placed candidates going head-to-head on May 7. Earlier on Wednesday, an Ifop-Fiducial poll showed Le Pen leading narrowly in the first round, but likely to lose the run-off to centrist Emmanuel Macron.

Reiterating Berlin"s need for France to play a full role in the European Union, which was stunned by Britain"s vote last June to leave the bloc, Schaeuble added: "Germany cannot lead Europe alone."

"That doesn"t work, that is completely clear," he said. "We need France at least as much as France needs us." Germany had a responsibility to lead in Europe due to its "geostrategic position", Schaeuble said, but added: "Some people expect too much of us ... politically, we are not as strong as France." To millions of European that may be the best news of the day.

French Presidential Race: Marine LePen Far Ahead Of Rivals In Secret Polling

An editor at French daily, Le Figaro, has alluded to secret polling data which show the Front National’s Marine Le Pen polling close to 34% among those with intentions to vote in the first round of the French presidential election.

Authored by Damien Cowley,

Surveys in the public domain consistently have populist LePen ahead of her rivals in the first round, at 26-28% of intentions to vote but losing to whichever rival she faces in the second.

A score of above 30% in the first round, however, would significantly boost her chances of continuing to victory on May 7th.

In his recent article on the failing efforts of the media and political classes to thwart LePen’s continued rise, editorialist Ivan Rioufol cites ‘sous le manteau’, or hidden surveys in circulation which show LePen likely to score double her father, Jean-Marie LePen’s 2002 score of 16.86%.

The politically correct ‘Maginot line’ of France’s elites can no longer hold out against the popular anger of the French public, Rioufol writes, arguing that the threats by leftist intellectuals and celebrities to quit the country in the event of a LePen victory are actually boosting her campaign. Likewise for scare-mongering media warnings on a ‘return to the 1930s’.

The French media and political establishment are now openly contemplating a LePen victory, with frequent reference to the Front National ‘at the gates of power’, an eventuality until recently considered impossible.

Outgoing president, François Hollande, who describes it as his ‘final duty’ to keep LePen from winning, and who is actively campaigning with government ministers in Front National strongholds to keep LePen from power, has recently admitted that she may win. Privately, Hollande is said to fear that LePen’s support is under-estimated in the opinion polls and that the momentum of a high score in the first round could make it difficult for any rival candidate to beat her in the second.

Marine Le Pen's Perfect Storm

Authored by Matt Purple via The Strategic Culture Foundation,

Polls missed the last two nationalist tremors; they may miss a third

Think of François Fillon as a more polished and experienced Ted Cruz. He might have been president of France until everything came crashing down.

Fillon is a former French prime minister and admirer of Margaret Thatcher whose libertarian-influenced agenda includes a pledge to ax half a million civil service jobs. He was initially dismissed as an also-ran in the center-right Les Républicains presidential primary, up against the seasoned Nicolas Sarkozy and the moderate Alain Juppé. Instead, Fillon thrashed them both, and polls showed him an early favorite for the French presidency, backed by energized conservatives and the Catholic Right. Eschewing first-past-the-post, France holds a runoff election between its top two finishing presidential candidates if neither secures a majority, and forecasts last year showed the finalists would be Fillon and the National Front’s Marine Le Pen. It was to be a rumble on the right, and Fillon was predicted to win in a rout as French leftists and centrists clothespinned their noses and voted to block the radioactive Le Pen.

Or at least, that’s what was supposed to happen. Instead, Fillon was quickly submerged in controversy as it came out that he’d funneled 900,000 euros in public money to his family, a scandal that became known as “Penelopegate” after his implicated wife. An investigation was launched and Fillon’s poll numbers sagged into third place, drawing an intervention from the omnipresent Sarkozy and whispers that Juppé might take over as nominee. But Juppé ultimately declined to run, cognizant of being a moderate beached in a year of fury, and Fillon remained defiant. He would only step down, an aide said, if a planned rally last Sunday turned out to be a dud. Lo and behold, tens of thousands of conservative faithful turned out, and he limped onwards.

France’s political dichotomy has thus been plunged into the unknown. The major parties are sidelined for now, with Fillon a boulder on the back of the center-Right Républicains and the center-Left Parti Socialiste floundering under the stewardship of detested current president François Hollande who is not standing for reelection. Amidst all this, the polling service Oxoda now finds Le Pen running neck-in-neck with another candidate, Emmanuel Macron, an independent whose En Marche! movement is serving as an outlet for the forlorn political center. Macron is a novelty in French politics: an investment banker who was appointed economic minister at the age of thirty seven and who’s still never been elected to public office in his life. He has a youthful charisma that this cliché-deploring writer only reluctantly describes as “Kennedyesque” and his rallies have grown exponentially in size since he entered the race.

The 2016 presidential election in the United States embodied the old versus the new, with Hillary Clinton the conventional and choreographed handmaiden of our hoary political consensus and Donald Trump the populist stick of TNT primed to blow underneath. Assuming present trends hold, the French election this April will be one step advanced, leapfrogging over the mainstream parties entirely and pitting against each other the two flavors of reform that are most likely to dominate Western politics in the years to come. Neither Macron nor Le Pen believes France can continue on its current track and both are proposing ambitious overhauls to the French social contract. After a year that’s seen economic stagnation and rowdy strikes, protests targeting abusive cops and demonstrations against immigration, terrorist attacks, soccer riots, and the southward seeping shock of Brexit, the only thing certain in France is that much has to change.

Le Pen’s appeal is obvious. She’s the Gallic Trump, France’s vessel for the West’s recent flirtation with populism. Head of the Front National, which had long been dismissed as bigoted until she vigorously resuscitated it and expelled its former leader and her father Jean-Marie Le Pen, she’s successfully blended anti-immigrant and anti-Islamic politics with a dedication to the welfare state that isn’t shared by more established French conservatives like Fillon. The nut of her message is that French institutions, benefits, handouts, society, all of it, ought to be reserved for the French and not its newcomers. Because the European Union stands for the globalism and multiculturalism she abhors, she energetically backed Brexit and has promised to hold a referendum on France’s membership in the EU.

The parallels between her candidacy and the Trump Train are undeniable: French voters shrugging that they’ve tried everything else so may as well take a gamble on the neophyte, blue-collar workers ditching the socialists after decades of perceived neglect, immigration as a political keystone joining Left and Right in fury wrought from economic pain. In northeastern France, industrial workers battered by globalization and the shuttering of their blast furnaces—“cathedrals” they call them—are breaking for Le Pen. In the rural middle, farmers, their livelihoods buttressed by Brussels, are stomaching Le Pen’s anti-EU rhetoric in favor of her promise to displace their loathed political class. The cultural flashpoints touted by the Front National—like its pledge to ban the chaste “burqini” swimwear popular among Muslims; “France isn’t burqinis on the beach. France is Brigitte Bardot,” Le Pen told CBS News—have real resonance with both demographics.

Like Le Pen, Macron is also determined to discomfit the French political establishment, which he views as quiescent and self-serving, and he too repudiates traditional party labels, defining himself as “neither left nor right.” But once you place him off the traditional political grid, it becomes evident he’s Le Pen’s antithesis in nearly every other way. He’s a devotee of Europe who believes the solution to the EU’s woes is reform rather than the scrap heap. He advocates for refugees whom he says present an “economic opportunity” and have “remarkable qualifications.” He espouses that inchoate mixture of social liberalism and economic liberalization with which many young people functionally identify. He understands that France’s overregulated and hamstrung economy can’t continue to function as is. He warned President Hollande that a proposed 75 percent tax on millionaires would turn France into “Cuba without the sun.”

The Le Pen-Macron dichotomy, which in many ways runs orthogonal to traditional Left and Right, is far more representative of where the peoples of the West are right now than the mainstream party duopoly. The issues are many. Do economies function better open or half-closed? Is a job something portable and ephemeral or is it a singular and sturdy column of well-being rooted in place? Can the globalization genie be put back in the bottle? Are we citizens of nations or citizens of nations and the world? Should our cardinal civic virtue be tolerance or patriotism? Le Pen’s and Macron’s answers to those questions, splayed on their respective platforms, could not be more diametrically opposed.

France is thus a microcosm of the present, fraught, unsteady Western world, and her election could be a dress rehearsal for our coming political realignment. The conjecture on the lips of European elites is whether Le Pen, whose brand of disruption is far greater anathema to them than Macron’s, can win the presidency. Conventional wisdom dictates that this won’t happen, that Macron will crush Le Pen in the runoff election, flush with support from Socialistes and Républicains determined to obstruct the Front National. But don’t be so certain. Portents were to be found at that Fillon rally last weekend where, amidst pouring rain and wind, conservative activists brimmed with tea party-esque rage towards their own party grandees. “If Fillon is out,” one demonstrator warned, “many of us will vote extreme, I am convinced.” If Le Pen can shepherd those disgruntled Républicains foot soldiers into her fold for the runoff, her chances will improve significantly.

Of course, the polls show . . . but who really cares what the polls show? They failed to register the last two nationalist tremors and it’s entirely possible they’re about to miss another one.

Despite Arrest Of Top Advisor And Bodyguard, New Poll Shows Le Pen Is Mightier Than Les Globalists

French authorities have made yet another monumental error in judgment after arresting Marine Le Pen"s chief of staff and bodyguard for questioning over alleged misuse of public funds to pay parliamentary assistants - the equivalent of a jaywalking ticket in terms of public opinion. By making le mountain out of le molehill, this latest debacle by French authorities is the most recent in a long list of backfired attempts to delegitimize the National Front candidate - including the refusal of French banks to lend money to Le Pen"s campaign, and the MSM"s ongoing hit-jobs (calling Le Pen "far-right" and "extreme" on a regular basis, for example).

These tactics seem to be working about as well as they did with Trump. Keep it up French establishment - you"ve effectively solidified Le Pen"s underdog status. In case you hadn"t noticed, your country is being burned to the ground by foreign invaders as France becomes one giant no-go zone. Instead of addressing the problem, you"ve doubled down on multiculturalism by continuing to welcome a hoard of migrants - 70% of which are "men of fighting age." 

Coincidentally, the latest French election poll has Le Pen ahead...

With her promise to return france to Economic sovereignty, it goes without saying that if Le Pen is elected in May, the European Union will be living on borrowed time. Frexit will happen and the ECB backstop will dissolve - considering Germany and France are it"s largest contributors. Italy"s solvency is #FakeNews with it"s 133% debt/gdp ratio, and the rest of the PIIGS are vulnerable to the big bad wolf of defaults. I wonder if Italy"s recent legislation of "extraordinary and temporary state support" of their largest bank was a canary in the coal mine of ECB death? The fact that Germany is pissed about it may be a clue.

What then? Euro hyperinflation as confidence erodes, or a Euro split to try and avoid it? A reversion to individual currencies as the entire EU experiment fails? The Netherlands is already considering dumping the at-risk currency. If any of these scenarios start to pan out, scared money will undoubtedly flock to the usual suspects; US Treasuries and other "safe" sovereign bonds, Dollars, precious metals, US real estate, and other safe havens. I"m sure you"ve been missing a little volatility in your life, right? 

Of course, the doom trade is never that simple, and most everyone got the Trump trade wrong. I"m sure the EU will find a way to cover up the carnage and pretend everything is fine, and we"ll see Dow 30K before any of that happens - so keep partying until the music stops, but don"t get caught without a chair (my most stupidest analogy to date).

Content originally generated at iBankCoin.com * Follow on Twitter @ZeroPointNow

French Bonds, Euro Spike After French Candidate Bayrou Endorses Macron, Le Pen's Chief Of Staff Detained

Update: as expected Macron has expected Bayrou"s alliance offer, AFP reports. It is still unclear if Bayrou has official withdrawn from the presidential campaign.

* * *

European assets spiked from near session lows, with the Euro and French OATs jumping, dragging Bunds lower and pushing US indices to intraday highs after French politician Francois Bayrou announced he was endorsing Emmanuel Macron in the upcoming presidential election, without saying if he decides not to run.

"This alliance can bring something to the country," Bayrou told reporters, warning that the stakes were too high to have so many candidates in the race for the Elysee. Bayrou, 65, a pro-EU politician who won about 9 percent of first round votes when he ran in the 2012 presidential vote, is polling around 5-6 percent according to some surveys.

Commenting in a press conference in Paris, Bayrou said “we are in such a risky situation and to this situation we need an exceptional answer." He said that he spoke to Macron one week ago. A Macron spokesman was not available for comments.

The reason for the market"s optimistic reaction is that if Bayrou had decided to run, it was expected that he may have eroded some of Macron"s support in both the first and the runoff round, making a Le Pen presidency more likely as she would then have had to face Fillon.That said, according to the latest Elabe poll reported yesterday, Le Pen"s odds would actually increase in the first round should Bayrou drop out, rising from 27% to 28%, to wit:

With Bayrou:

And without.

In any case, the market took the news as favorable, and Bund futures promptly slid around 20 ticks in two minutes, while French 10y bonds jumped, sending yields lower by ~5bps on the session. The German-France 10y spread has also tightened around 5bps, while in the US Treasury bond futures slide from session high.

French German spreads:

And EURUSD:

Meanwhile, earlier in the day, French police detained far-right presidential candidate Marine Le Pen’s bodyguard and chief of staff in custody on Wednesday for questioning over alleged misuse of European Union funds to pay parliamentary assistants, Le Pen’s lawyer said according to Reuters. Le Pen denounced the latest move in a financial sleaze case that has landed her in the spotlight alongside another leading candidate, Francois Fillon, a right-winger being investigated over public funds he paid to his wife and children.

Wary that her image and lead position in polls of voting intentions could be hurt, Le Pen on Wednesday said she was convinced voters would not fall for what her lawyer Marcel Ceccaldi called a “manipulation” designed to destabilise her.

“The French can tell the difference between genuine scandals and political dirty-tricks,” Le Pen, who has previously denied any wrongdoing in the affair, told reporters.

The two held for questioning are Le Pen’s bodyguard, Thierry Legier, and her chief of staff, Catherine Griset, key figures in an investigation opened following demands by the European Parliament that Le Pen repay money she is accused of wrongly paying the two.

Wednesday’s detentions followed a police raid on Monday on Le Pen’s National Front party headquarters on the western edge of Paris, while she was abroad.

Fillon’s poll ratings fell after the scandal concerning him surfaced in late January but they have since steadied and he is more or less neck-to-neck with Macron for the other slot in the May 7 duel.

Le Pen's Chief Of Staff, Bodyguard Detained By Police

It is getting difficult to keep track of all the parallel (alleged) financial scandals involving French presidential candidates.

Several weeks after presidential candidate Francois Fillon"s campaign nearly ended over a sprawling graft scandal involving allegations he used public funds to pay the wages of his wife and children, on Wednesday, French police detained two of Marine Le Pen"s closest aides: her bodyguard and chief of staff,  for questioning over alleged misuse of European Union funds to pay parliamentary assistants, Le Pen"s lawyer said.

Le Pen slammed the latest move in what Reuters dubbed "a financial sleaze case" that has landed her in the spotlight alongside another leading candidate, Francois Fillon, a right-winger being investigated over public funds he paid to his wife and children. Wary that her image and lead position in polls of voting intentions could be hurt, Le Pen said she was convinced voters would not fall for what her lawyer Marcel Ceccaldi called a "manipulation" designed to destabilize her.

Marine Le Pen walks on the Promenade des Anglais with her bodyguard Thierry Legier

"The French can tell the difference between genuine scandals and political dirty-tricks," Le Pen, who has previously denied any wrongdoing in the affair, told reporters. The two held for questioning are Le Pen"s bodyguard, Thierry Legier, and her chief of staff, Catherine Griset, key figures in an investigation opened following demands by the European Parliament that Le Pen repay money she is accused of wrongly paying the two.

Le Pen is a clear frontrunner in the April 23 first round of the two-round presidential race; while polls have seen her losing the runoff ballot on May 7 - to either Fillon or another independent candidate, the centrist Emmanuel Macron - she has steadly eroded their advantage in recent days, leading to a selloff in French bonds and a furious buying spree in German short-term bunds, which earlier today hit a record low yield of -0.92%.

Wednesday"s detentions followed a police raid on Monday on Le Pen"s National Front party headquarters on the western edge of Paris, while she was abroad.

WikiLeaks: CIA Plotted to Infiltrate Every Major French Political Party

(ANTIMEDIA) A fresh release of classified documents shows the CIA permeated France’s 2012 presidential election, according to Wikileaks. The agency targeted every major party, as well as the current and former president and other prominent candidates.

Wikileaks has been teasing its upcoming “CIA Vault 7” document dump. Thursday’s release of seven pages containing three CIA tasking orders regarding France’s 2012 election is the first such promotion to offer something of substance.

The documents show CIA spies working in human intelligence (HUMINT) and electronic, or signal, intelligence (SIGINT) were directed to infiltrate each major French political party and several leaders from November 21, 2011 to September 29, 2012. Elections took place between April and May of 2012, meaning the operation began about six months before the vote and lasted around four months afterward.

The operation targeted the French Socialist Party, the National Front, and the Union for a Popular Movement, along with current leading presidential candidate Marine Le Pen, current President Francois Hollande, then-President Nicolas Sarkozy, and former candidates Martine Aubry and Dominique Strauss-Kahn.

Assessing that President Sarkozy’s Union for a Popular Movement was “not assured of winning the presidential election,” the CIA issued the espionage order, entitled “Non-Ruling Political Parties and Candidates Strategic Election Plans,” in order to better inform U.S.-France policy, according to the documents.

Among the specific instructions for spies were orders to obtain Sarkozy’s private talks “on the other candidates” as well as his own advisors. The agency valued information pertaining to changes in the party’s “perceived vulnerabilities to maintaining power” and its ideological direction, as well as Sarkozy’s interest in “the continuation of the party’s dominance,” the documents show.

Wikileaks cites a previous 2012 espionage order calling for the discovery of details on any potential French export contract or deal valued at $200 million or more as seeming to be connected to specific CIA tasks under the “Strategic Election Plans” order. Those tasks asked the questions: “What policies do they promote to help boost France’s economic growth prospects?” and “What are their opinions on the German model of export-led growth?”

Additionally, the CIA wanted to know the candidates’ positions on the Greek debt crisis and the roles of France and Germany in its management, along with information regarding the “specific proposals and recommendations” for and consequences of a Greek default on France’s government and banks.

The leaked documents were classified and for U.S. eyes only, marked “NOFORN” because they contained “Friends-on-Friends sensitivities.”

Wikileaks claims this most recent release will serve as “context” for its anticipated Vault 7 series.

It comes at a time of relentless speculation over Russia’s influence over the Trump administration and the November presidential election, as well as reported divisions in the White House since controversial leaks led to the resignation of General Michael Flynn as national security advisor to President Donald Trump.

Creative Commons / Anti-Media / Report a typo

Someone Will Make A $100 Million Profit If Le Pen Wins

A payout of more than 100 million euros ($106 million) may be beckoning for options investors if the German 10-year yield drops to zero in the aftermath of France’s elections.

German 10-year bunds currently yield about 0.30 percent, so a decline to zero would represent a significant increase in demand for haven assets. That would mirror moves seen after the U.K.’s Brexit vote.

As Le Pen"s odds of victory in the French elections rises, so the spread between "risky" France and "safe-haven" Germany has soared...

And as Bloomberg reports, traders have been snapping up bund options at a brisk pace to gain from the potential possibility of National Front candidate Marine Le Pen becoming president. While the latest opinion polls show she is likely to lead the first stage of voting before faltering in the second round, the political shocks of 2016 have left traders on edge about the potential for more surprises.

Having detailed the various "hedges" against a Le Pen victory earlier, one of the more popular trades set to benefit from a Le Pen victory however is seen in long-call calendar spreads on Bund Futures.

There are two parts to the trade. In the first section, the investor sells a call and a call spread expiring in April, betting that bund futures will slide going into the first round of election. In the second, the investor buys a call and a call spread betting that bund futures will rise by the end of May, covering the second round of the French vote on May 7.

The call that is sold to expire in April has a strike of 162.50, while the one bought for May has a strike of 163. The call spreads have the same strikes: 163.50 and 165.50. The maximum profit on the bought call spread is capped at 165.50, which equates to a yield of zero.

Premium of about 11 million euros has been paid on these exchange-traded options cleared through the Eurex platform, according to people familiar with the matter. If the bets play out to script, the trade will earn a gross profit of 114 million euros, leaving a net profit of about 103 million euros.

And most notably, as Bloomberg reports, the bulk of the trades are from a single investor, according to people familiar with the matter who asked not to be identified because they aren’t authorized to speak publicly.

Fillon Apologizes For Employing His Family, Vows To Keep Campaigning With Renewed Energy

With some speculating that French presidential candidate Francois Fillon, mired in a growing political scandal involving public payments made to his wife and children for a "fake job", would announce a resignation at a 4pm conference, moments ago the former frontrunner for the French presidency defended himself as Reuters suggested, and stated that he has "nothing to hide", that his wife’s salary was “perfectly justified” and that he has been the subject of unprecedented political attacks.

He also said that "everything about him is legal and transparent" and that he would disclose his assets, including his real estate, and bank accounts. While he did acknowledge the "morality" angle of his case, he called for overall reform of the parliamentary aide system. Curiously, he also added that his wife "never worked for any Russian entity."

“I understand the need for me to clarify things and I will do it because I have nothing to hide,” Fillon said at a press conference in Paris. “Yes I employed my spouse. She was in the job for 15 years.”
The practice was legal, though he acknowledged that it is no longer seen as acceptable and he apologized to voters.

He did not miss the opportunity to take a dig at his main opponent, Marine Le Pen, and said that the "real danger in France is the extreme right."

He then vowed to keep campaigning with renewed energy.

The Republican nominee’s recovery plan comes in the face of falling in support in the polls since the a Jan. 24 report saying that his wife had worked as his parliamentary assistant for many years while showing little to no presence in parliament. Prosecutors opened a preliminary probe into the matter and extended the investigation into his children who also worked in similar jobs.

Polls by Ifop and Elabe show Fillon has slipped into third place in the election behind National Front leader Marine Le Pen and independent candidate Emmanuel Macron. Surveys also show that Macron would go on to defeat Le Pen in the May 7 run-off vote.

Le Pen currently has the support of 25 percent of voters, compared with 20.5 percent for Macron and 18.5 percent for Fillon, according to the latest Ifop rolling poll.

While the public"s immediate response to Fillon"s speech appears to be agreeable, with Fillon"s odds of becoming next president with online bookies rising from 6/1 to 4/1 after the speech...

Francois Fillon speech goes down well with political punters,who back him from 6/1 to 4/1 to be French President. 6/5 Macron; 5/2 Le Pen.

— William Hill (@sharpeangle) February 6, 2017

... but the market"s kneejerk reaction is less favorable, with French bonds extending losses, as the 10Y yield climbs 6bps to 1.14%.