Long

Markets Rapidly Rewrite LePen Risks

Updated

Since 72 hours Jean-Luc Melenchon run-off hopes improve. The four candidates Fillon, Macron, Melenchon and LePen are in a very tight range wich cause now that the French 1st election round is less predictable.

For Stockmarkets now it´s necessary to understand two issues:

1. Wich pairs could be the result of the French Election 1th rounds
2. Bets and hedges against France

Knowing the details are necessary for any riskmanagment. This knowledge is not written in yesterdays charts.

Note

APR 12 2017 - Basic knowledge:

The first round of the 2017 French presidential election is set to be held on 23 April 2017. Should no candidate win a majority, a run-off election between the top two candidates will be held on 7 May 2017.
en.wikipedia.org/wiki/Opinion_polling_for_the_French_presidential_election,_2017

Note

Actually 4 candidates within a very tight range from 18% (Fillon, Melenchon) to 23/24% (Macron, LePen). This is to close to call.
en.wikipedia.org/wiki/French_presidential_election,_2017

4 candidates means that 6 pairs are possible:

- LePen vs. Macron: Expected. For Stockmarkets neutral or positiv opening on Monday April 24
- LePen vs. Melenchon: Sharp Sell Off up to stockmarket crash on Monday April 24th possible
- LePen vs. Fillon: Neutral or lower opening on Monday April 24th.

- Macron vs. Fillon: Rocket straight up on Monday April 24th.
- Macron vs. Melenchon: Higher opening on Monday April 24th.

- Fillon vs. Melenchon: Sell off likely.

Note

Why todays opinion polls might be wrong: "Strategic voting"

- Melenchon could be supportet by Benoit Hamon voters (8% likely voters for Hamon right now)
- LePen supporters could have fears, that a left wing politican (Melenchon) or a center politican (Macron) could become next president. It might be possible that some could vote for Fillion in the first round.

The majoritiy of French Voters ether don´t want LePen or Melenchon to win and might vote for Macron. If ever Macron would win the first round ahead of LePen stockmarkets will open on Monday April 24th with a 1% gap to the upside and will continue this upmove.

Also possible, but unlikely is a single winner in the first round, elected by strategic voting:

Macron: At least 2-3% upmove on Monday April 24th
Fillon: 2-3% upmove on Monday April 24th.

LePen: Sell Off or Stockmarket Crash
Melenchon: Sell off or Stockmarket Crash

Note

My Opinion:

All in all according to todays number it is impossible to trade any likely result. Maybe this is going to change until next friday, march 21th 2017.

Even a straddle might not be succesfull. Some results might be a "non event" and could cause a sideways pattern until the second round of election on May 7th 2017. Who ever can not resist to bet on any result should compare this to a regular roulette game, expecting red or black to come and same time threatened "green" to come. Who ever can not resist to bet on any result should compare this to a regular roulette game, expecting red or black to come and same time threatened "green" to come. If ever polls might not change or traders have precise knowledge about French culture and politics remind that any position is at a high risk. Shortseller can even get burned like traders who are invested in long positions. Remark: Keep in mind that 99% if all traders don´t know about this details bcs. they don´t care. If you understand, that 6 pairs are possible now and that strategic voters might cause, that the polls are deeply wrong same like that a very low number of voters on April 24 could trigger an unexpected outcome that you all belong to a small minority knowing about whats going on.
All other traders will learn about this like on the Brexit or Trump election and than it might be to late. Stockmarkets reaction can be even to the upside than to the downside.

Note

April 12 - Markets: Complacent No More: Hedging Costs Jump in Europe’s Stock Market

Cost of protecting against a drop in the Euro Stoxx 50 doubles
VStoxx, CAC 40 volatility climb for 10 straight days

With less than two weeks to go before the first round of French presidential elections, investors are racing to protect gains that have pushed the region’s shares to their highest prices in more than a year.

The cost of hedging against declines in the Euro Stoxx 50 Index has surged to its highest level since the U.K. referendum on European Union membership, rebounding from near a 15-month low in just a little more than a week. Even as equities have remained stable, a gauge tracking volatility expectations has climbed for 10 straight days, the longest streak since November. Source: bloomberg.com/news/articles/2017-04-11/complacent-no-more-hedging-costs-jump-in-europe-s-stock-market

Note

APR 12 2017 - Jitters over French election return to rattle markets

Quote: Rise of far-left candidate is a reminder that euroskepticism is widespread, analysts say

Investors have learned one thing about politics over the past year: Don’t take anything for granted.

Nowhere is that more apparent right now than in the French presidential race where a recent surge in support for socialist and euroskeptic candidate Jean-Luc Melenchon has added a layer of uncertainty to the country’s election. That is bringing “Frexit” fears back to the fore, rattling financial markets this week.

The spread between French and German 10-year government bonds has jumped to a seven-week high at 75 basis points, indicating investors are becoming more nervous about the election outcome, according to analysts. That is also weighing on the euro EURUSD, +0.0094% , which on Tuesday traded around a one-month low at $1.0579, before recovering to $1.0613 later in the session.
Source: marketwatch.com/story/french-election-fears-return-to-rattle-bonds-euro-2017-04-11

Note

French Yields: Click on this chart to open and load new bars:

France Yields: Fear Indicator / French Election

Note

French Yields -Click on this chart to open and load new bars:

Note

APR 12 2017 - Le Pen no longer markets' only French election worry as Melenchon surges
April 11, 2017, 10:33:00 AM EDT By Reuters
Quote: With just 12 days to go until the first round of voting in
the presidential election, polls are tightening. For weeks
investors have been betting that the run-off would be between Le
Pen and the centrist Emmanuel Macron, with Macron beating the
far-right candidate comfortably in the second round.
But investors are rethinking that assumption. A poll from
Ifop on Tuesday put Melenchon in third place, ahead of the
conservative Francois Fillon and just four points behind Macron,
and confirmed that almost one-third of voters are still
undecided. Source, Read more: nasdaq.com/article/le-pen-no-longer-markets-only-french-election-worry-as-melenchon-surges-20170411-00775

Note

APR 12 2017 - This aren´t peanuts. This are multi billion Euro or Dollar bets aganist Europe based on fears and probably not precise research about the upcomming France election. The main argument is that "polls had been wrong" before the Brexit and the US-Election.

Note

APR 12 2017: Beds against Europe may had peaked today.

Note

APR 13 2017 Poll: Macron taking the Lead, LePen drops to the lowest level since 18 month.

23,5% Macron
22,5% LePen
20,0% Fillon
18,5% Melenchon

Note

APR 14 2017: Marine LePen losing more voters

23% Macron
22% LePen
20% Fillon
20% Melechon

The French elction now is unpredictable.

Note

APR 14 2017: French presidential race tightens further as vote looms
Source: reuters.com/article/us-france-election-idUSKBN17G0Q2

Note

APR 17 2017: Election is getting more and more unpredictable

Opinion Way polls:
22% Macron
22% LePen
21% Fillon

Note

APR 17 2017 - "Le Terrian" poll first time showing LePen only 3rd.
24% Macron
22% Melenchon
21,5% LePen
17,5% Fillon
Source for all polls: en.wikipedia.org/wiki/Opinion_polling_for_the_French_presidential_election,_2017

Note

APR 18 2017 Europe's 'fear gauge' is rising ahead of first presidential vote in France this weekend
cnbc.com/2017/04/18/frances-borrowing-costs-are-under-pressure-as-political-uncertainty-rises-ahead-of-first-presidential-vote.html

Note

APR 19 2017: Macron clings on to lead in tense French election race
Centrist Emmanuel Macron held on to his lead as favorite to win France's presidential election, a closely-watched poll showed on Wednesday, although it showed that the first round of voting at the weekend Sunday remains too close to call. Source: investing.com/news/world-news/macron,-le-pen-cling-on-to-first-round-lead-in-french-election-race:-le-monde-cevipof-poll-475261

Note

APR 19 2017 - LePen only 2% ahead of Fillon. Odds rising that LePen might become 3rd on next Sunday.
en.m.wikipedia.org/wiki/Opinion_polling_for_the_French_presidential_election,_2017

Note

APR 20 2017: It´s now headline on bloomberg.com

French Election Shocker: Pollsters Baffled by Four-Way Race
Sorce: bloomberg.com/politics/articles/2017-04-19/french-election-shocker-pollsters-baffled-by-four-way-contest

Note

APR 20 2017: Mind mind the risk
app.handelsblatt.com/finanzen/maerkte/anleihen/anleihemarkt-die-nerven-liegen-blank/19687396.html

Note

APR 20 2017 -Mind the risk:
cnbc.com/2017/04/20/publicis-ceo-maurice-levy-gives-his-nightmare-scenario-for-the-french-elections.html

Note

APR 24 2017: Wall Street surges, Nasdaq hits record on French vote result
investing.com/news/stock-market-news/futures-rally-as-french-worries-ease

Note

Bund spreads rising since APR 24 2017

Le Pen, Macron spar as French presidential race narrows slightly
investing.com/news/world-news/macron-campaign-for-french-presidency-off-to-slower-start-than-le-pen:-poll-477875

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