Monday, April 10, 2017

Focus on French Elections

The next big event are the French elections coming up in April 23.  That is round 1, and it looks like Le Pen will be favored to take 1st place in that vote.  It could put a little scare into financial markets if she wins more of the vote than expected.  If the US elections give us any clues, it is that you cannot underestimate shy voters of radical candidates.  The weak global economy has left behind a lot of obsolete workers.  It is not purely a US phenomena.  It could mean a higher vote numbers for a far right candidate like Le Pen.

We are stuck in a small range, but vigorously moving back and forth in that range.  The VIX futures for April have been strong recently, even though S&P hasn't gone anywhere.  It looks like French election risk is starting to be priced in.  The next step is for the S&P to go lower.

Bond moves on Friday are a bit puzzling, it should have been trading much stronger on a weak nonfarm payrolls report and mediocre equity action, but it traded lower, significantly.  The 2.30% level was defended again, and the bears won this time.  I am still expecting a break of that 2.30% level, as the French elections near.  Buying Treasuries looks like a good swing trade for the next couple of weeks.

Overall, fairly boring market.  Not much opportunity these days, so won't be looking for much if I do put on a trade.


Anonymous said...

Trumps conduct is to surprise. We seen it with the attack on syria and im sure he picked that up from his business experience. Any concern with a possible missile strike into north korea or iran?

Market Owl said...

Striking Syria is much easier than striking North Korea or Iran. So much less likely to strike those other countries.