France: “Rendezvous” at the third round…

The first round of the French presidential elections was once again proof of the implosion of the historical parties. Like the elections in the Netherlands, the Socialist Party collapsed, garnering less than 7% of the votes. As I had pointed out a few days ago, the four main candidates stood at 25%. Yesterday’s results indicate that France is now split into four parts.

The problem, however, lies elsewhere; specifically:

·      Yes, the National Front is indeed in the second round of elections (counting 6.9 million voters). The French, though - and this, for over 15 years - have been used to voting for the ‘least bad’ among the candidates, as opposed to the best one. It is also important to note that one out of two French voters picked an anti-European candidate. We will therefore have a coalition between the National Front, which will bring Emmanuel Macron to the presidency. It will be interesting to hear Jean-Luc Mélechon’s voting advice (if any) for the second round. And on this topic...

·      Yes, the Socialist Party and the Republican right have essentially imploded. That said, these two historical powers are going to do everything in their power to win the legislative elections. This means that Macron has very little chance of garnering a real (and lasting) parliamentary majority, and that France runs the risk of starting off the five-year term under the regime of cohabitation.

·      Last but not least, yes: the extreme left power - led by Mélechon - is going to bring with it heavy social consequences within companies and administrations. Especially given Macron’s weak experience, this move towards extremes runs the risk making the actual leading of the country very difficult.  

To be clear, the wave of extremism has little risk of unleashing on France in the second round of elections. But Macro could commit mistakes during the two weeks before the second round. That said, the parliamentary elections could ultimately be the very translation of the political disarray which is going to hit the country. 

Just have look to the spread BUND/OAT and this one is not tightening...