A Delighted Wall Street Reacts To The French Election

Tyler Durden's picture

With European stocks on fire, and US futures moving fast to recoup recent all time highs, it is no surprise that Wall Street is feeling particularly bullish this morning.

As noted previously, the market moves suggest that traders were positioned for French pollsters to be wrong again, and yet unlike Brexit and Trump, this time the polls were spot on. The snapshot result: the French CAC 40 is up as much as 4.6%, DAX up as much as 2.9% to record high; euro-zone Stoxx banking sector index up as much as 6.9%; VStoxx volatility index down as much as 31%; France- Germany bond yield spread narrows to lowest since January; euro gains as much as 2%. Meanwhile, looking at the runoff round, polls now see Macron defeating Le Pen with a sizable margin, somewhere in the 62%-38% area.

Below is a sample of slleside analyst reaction to Sunday's outcome.

BofAML equity strategists including Ronan Carr, James Barty

  • Political uncertainty has been a headwind to global investors re-allocating to Europe; BofAML sees significant potential for European fund flows to recover further
  • Focus can shift to solid fundamentals in Europe
  • Solid macro backdrop, strong operating leverage evident in European corporates point to upside risks to BofA’s 11% EPS forecast for Stoxx 600; earnings momentum is strong with 84% of sectors enjoying upgrades

Citi strategists including Jonathan Stubbs

  • European banking sector likely to benefit from lower political risk premium and narrower sovereign spreads following “risk-on” outcome in first round of French election
  • Says French banks could outperform by ~10% in short term, broader sector likely to be key leadership group in market
  • Lower political risk could “release handbrake” across policy makers, CEOs, investors and individuals; expects international investors, particularly U.S., to return to European equities

Credit Agricole strategist Valentin Marinov

  • “Very hard” to find a euro-negative factor; risk is clearly pointing to more euro upside from here
  • Now with political risks abating, investors’ attention may turn to the certainly attractive assets denominated in euros, like euro area stocks

Natixis strategist Sylvain Goyon

  • Expects a relief rally, CAC 40 could outperform DAX by 3%-4% within a few days given French market discount
  • Among sectors which could benefit the most from relief rally: insurance, banks, financial services, autos, tech, real estate

AXA IM economist Laurent Clavel

  • What really was priced was the possibility of a very market unfriendly result; For the French economy just yet the economic policy uncertainty is not lifted
  • “The membership of France in the euro zone and in the EU, that risk, which was really the focus of markets, is almost gone”

Goldman Sachs equity strategist Peter Oppenheimer

  • Equity market has already largely priced the outcome; concerns about the vote have not prevented European equities and CAC 40 from performing well on an absolute basis in 2017
  • Expect the results to generate some relief for FTSE MIB, French and Italian banks, and a very minor relief for CAC 40
  • French domestic stocks and CAC 40 have not underperformed significantly as of late; Goldman doesn’t expect them to rally materially now, or after second round

BlackRock strategists including Richard Turnill

  • Result is positive surprise for risk assets in near term
  • Business-friendly and pro-European Macron, who has maintained large winning margin in head-to-head polls with Le Pen, can now build on his momentum
  • Result should lead to material reduction in perceived political risk in Europe; some risk premium should linger until legislative elections in June
  • If Macron becomes France’s next president, may struggle to implement his agenda without stable parliamentary majority
  • Expects Italy to be the next focus of European political risk

Credit Suisse equity strategist Pierre Bose

  • Markets are likely to react positively to the news, with the risk of an adverse presidency for the French economy and European integration now markedly lower
  • Continues to prefer European equities backed by cheap valuation and positive growth momentum; European banking stocks should also benefit in next few days; CS continues to prefer them to their U.S. counterparts

JPMorgan AM fund manager Stephen Macklow-Smith

  • Assuming Macron does win the presidency, investors will no longer have an excuse not to allocate to European equities. We hadn’t taken that much risk off the table as we were expecting a market-friendly outcome, but will marginally add cyclical exposure. In short-term sees French financials catching up with the rest of the market

Runestone Capital Fund founder and portfolio manager Rune Madsen

  • Result reduces some short-term risk. Potential negative did not transpire, there will most likely be less demand for protection
  • Still, with previous events like Brexit or U.S. election, initial reaction was not what transpired one day or a few weeks later; important to keep that in mind

Bankhaus Lampe equity strategist Ralf Zimmermann

  • Vote could mean that global stock investors are more willing to trade future positive macro surprises in Europe
  • Bigger picture is unchanged: fundamental upside for stocks is now limited, valuations have expanded notably, particularly in U.S., but also in Europe, which means that stock prices have outpaced earnings estimates

Societe Generale analysts

  • With risk of populism fading, investors should start focusing on the banks’ strong fundamentals; highlights credit and deposit growth is strong, GDP estimates have gone up and number of companies expected to be loss- making has remained flat

Kepler Cheuvreux analysts

  • Despite a number of open questions, notably whether the new president will find a governing majority, still there, French elections will reassure investors, trigger fresh capital flows into the region
  • Expects higher risk premium for pure European assets seen since Brexit vote to soften somewhat; says risky European domestic exposure should outperform over the next few months

TD Securities macro strategist Jacqui Douglas

  • Results for top candidates almost exactly in line with what polling had predicted, TD confident investors can look to a big Macron win in second round, as polls have him wining by nearly a 2:1 ratio
  • Given renewed trust in polls, markets unlikely to wait until May 7 before pricing out the risk of Frexit, and we look for a risk-on trading environment to start the week

Investec Wealth & Investment strategist John Wyn-Evans

  • Had said for a while that Europe looked attractive as an investment destination, but had been holding back from further investment owing to political concerns
  • Europe has the potential for further recovery that has already taken place in, for example, the U.S. and the U.K.
  • Europe’s stock market is calculated to be one of the most operationally geared into continued recovery and on the long view has a lot of catching up to do

Makor Capital Markets strategist Stephane Barbier de la Serre

  • Le Pen comes a close second, however the math of vote redistribution will simply not work for her and therefore expect Macron to win the run-off with a wide margin
  • It does dispel at once the risk of any kind of “Frexit” in the foreseeable future, which should lead to much reduced risk premia on French stocks and bonds and therefore boost prices of all European risk assets in the next few weeks

Source: Bloomberg

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Déjà view's picture

U.K.raine...on outside looking in...

Hammer823's picture

There is no possible event that is "bad" for stocks.

Brexit, Trump, Italy, etc. all miraculously turned out to be good.

There can't be any "bad" news in a stock market that is rigged to go up.

Even if the French vote went the other way.  Any disappointment would have been immedaitely reversed.

Just like all losses on a down day, when down days are permitted to happen.

https://www.instagram.com/the_rigged_street_journal/

Scrimpy's picture

FAKE NEWS, FAKE ELECTION

 

 

Part 2

 

So WHY doesn't the "FAKE NEWS" media call Israel "anti-semite for their 70 YEAR OLD ARAB AND MUSLIM TRAVERL BAN?

I did some more research and found out that 95% of the U.S. media (FAKE NEWS) is run by the NON-ARAB SEMITES. Yep, 1.8% of the population controls 95%
of all movie studios, news networks, newspapers, publishing houses, TV Stations, magazines, record companies, and even almost every single pro sport.
Not only that, the same  1.8% of the  population OWNS THE FEDERAL RESERVE BANK, (a private, for profit bank) and just printed themselves and their buddies over
SEVEN TRILLION DOLLARS under Obama alone. WHITE PRIVILEGE?????? Really?????

We can't even AUDIT THE FED and see where that money went, BECAUSE THE 1.8% who control the media SAY IT WOULD BE 'ANTI-SEMITIC'.
These are the same people who are constantly LYING ABOUT WHITE PRIVILEGE. Which group of white people HAS THEIR OWN PRINTING PRESS
AND CAN PRINT THEMSELVES AS MUCH MONEY AS THEY WANT TO? It's no surprise that the media has never explained what Quantitative Easing is.
Q.E-1, Q.E.-2, Q.E.-3 and soon Q.E. 4-Ever! Mostly JEWISH BANKERS PRINTING THEMSELVES AND THEIR BUDDIES TRILLIONS! Where did it go?
Who wants to bet they will be screaming for another Bailout within a year or two?

btw, a Trillion = 1000 X 1000 X 1000 X 1000...So 8 Trillion in FREE MONEY is not enough for the privileged 1.8%?????? They need more?
White Privilege???? Really?

remain calm's picture

Wall Street likes Globalism. People of the world, take note, you are definitely going to get fucked.

Yellow_Snow's picture

Wow, Macron is gonna fix everything... PIGS banking debts, Greece, and stop Islamic terrorists.  No problems over here!  All fixed, move along...

2_legs_bahhhhhd's picture

Headline should read

Marxism suffocates the planet....BANKS CELEBRATE

QQQBall's picture

Quick... everyone buy broke-ass Europwean bank stox.

Troy Ounce's picture

 

You see. There is no God. 

You must all do it yourself.

wmbz's picture

Is there a single soul left that does not understand that all news is good news for W.street. The NORKs could fire off nukes, France can elect whoever, it makes no diffference. All indexes could sell off, the FED will just buy it all up.

Real news, fake news it makes no difference at all. The CB's control the "money" system, period. It is beyond rigged, it is owned.

Banksters Inc. rule.

FreeShitter's picture

The beatings will continue on the sheeple  until morale improves. 

Portuguese Revolutionary's picture

Dude, Macron was a Rotschild banker...

That's why they are so happy!

Banker scum back in power....

BigFatUglyBubble's picture

So was Wilbur Ross.

I'm starting to notice a trend here...

baby_tone's picture

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... http://bit.ly/2jdTzrM

Vuke's picture

I enrolled in your "program" for a cost of $300 and am making nothing.  $zero.  $zilch.  

hoist the bs flag's picture

please put the sarc tag on next time. 

Vuke's picture

You are right.  (S)he probably needs it.

FreeShitter's picture

Blow pony says tomorrow is the day.

Fundies's picture

Last week......WW3, and now we get this ?

cstu7011's picture

Anything to get high...

highwaytoserfdom's picture

wow  balance sheet banksters are fake  news players? 

 

READY TO STICK A PIN IN FED AND SWIFT.    How we going to know with auditors  gone completly Enron. 

I have no place to hide that is the only sure thing. MOAR war

http://www.zerohedge.com/news/2016-07-31/500-years-stock-panics-bubbles-...

 

 

"The Rothschilds, and that class of money-lenders of whom they are the representatives and agents -- men who never think of lending a shilling to their next-door neighbors, for purposes of honest industry, unless upon the most ample security, and at the highest rate of interest -- stand ready, at all times, to lend money in unlimited amounts to those robbers and murderers, who call themselves governments, to be expended in shooting down those who do not submit quietly to being robbed and enslaved." by: Lysander Spooner
(1808-1887) Political theorist, activist, abolitionist
Source: "No Treason #6" (1870)

 

Kidbuck's picture

Spooner was right but he couldn't sell his ideas in quantities enough to make a difference. "Gimme moar free shit," now that's an idea that sold in bulk.

shutterbug's picture

The economic world is CERTIFIED CRAZY... what is good for people Is Not So Good For These Morons... and stocks

But HEY... any news is good news for all economic zombies and they certainly are Top-zombies.

So... up they go and another 2-3% gain must be reached. Otherwise the sheep will wake up.

buzzsaw99's picture

Focus can shift to solid fundamentals in Europe

you can't make this shit up.

Giant Meteor's picture

The end is nigh !

Nein, Nyet !

Pop3y3too's picture

They're priming the pumps...fattening up the calves for slaughter...milking it for all its worth..."No...really, I can't eat another bite."  splatter

gunzeon's picture

you know, i cannot see Macron pulling the Alpha Male vote, or the Alpha Male's chick vote, does France have Alpha males ? or will the voters revel in Macron's offbeat traits and hand it to him

I would short him tbh.

Ghordius's picture

it's France, remember? a French Alpha Male is one that has a wife, a family with that wife and... one or two mistresses, whereas it's optional if the main mistress has another family with him or not, or if he has a kind of "revolving door" harem

seen this way, the French Alpha Male has had plenty of French Presidents that were Alpha Males. whereas the French press was always keen on reporting on the "second families" only after the guy was dead, as in the case where both families showed up at the funeral

Hollande would usually not count as example of "Alpha Male", would he? and yet, he had his Official Mistress battling his Inofficial Mistress which he visited riding one of those French three-wheeled scooters with a French security officer riding with him on it

I guess most French Alpha Males would scoff and point out that they don't need any prop to their masculinity by having another "Alpha Male President". and so they have now a choice betwen the "Whiz" Boy and the "Hard" Woman

yes, French Alpha Males are different, too, in the sense that they laugh a lot. and they have plenty of reasons: French women. really, really not the same thing as American women, who can't be compared with any other, worldwide

(yes, it's mean to be funny)

Brazen Heist's picture

From where and when did this mistress business become so entrenched in French society?

Ghordius's picture

you could ask the same question in a different way:

from where and when did this business become dis-entrenched in British and American society?

when I meet Russians... more often then not they show me photographs of their children, first, and their mistresses later. I could say Portuguese, I could say Italians, I could say practically all... continentals

the French are just the most flamboyant in this

perhaps it was the Puritans, perhaps it was all the churches arguing for multiple wifes, I don't know

counterquestion: explain to me the Phenomenon of the American Woman. Why is She So Exceptional? Why does She fervently believe that She is a Goddess Of Sex, for example? Why does the American Man... put up with all those exceptional traits?

Brazen Heist's picture

Alot of American women have adopted bad attitudes and overly heightened senses of self-importance. I blame Hollywood and the ubiquitous fake trash entertainment industry for that influence.

I guess at the end of the day, institutionalized monogamy goes against human nature. It works for some, but not for many.

gunzeon's picture

ok, i dig, so if Macron's sideways rooting is exposed - and soon - then he'll fly

runnymede's picture

France hasn't had an alpha male since DeGaulle and Clemenceau. The closest thing they got is LePen. 

Their moment of power to put the nail in the satanist global ruling cabal's coffin will be pissed away, I'm afraid.

Enjoy sharia law and regulation of every activity from shit-for-brains Brussels based bureaucrats.

France does not see their moment of power is right now. Too distracted putting out car fires in muzzie no-go zones, picking up trash in Paris streets, and not prosecuting immigrant rapes to see the larger picture. 

......." I coulda been a contenda"....

sister tika's picture

Another global 'rally' before the roof caves in. JOOz be doin' the snoopy-stawke dance for the rest of the week.

yogibear's picture

Limited downside, just BTFD!! Central banks using printed billions to buy stocks. Stocks are the Central Banks facade to a good economy.

Steal from savers to give to the speculators.

See plenty of Maseratis around now. 

jet20's picture

When Wall Street is winning it's because John Doe is losing. In France, America and everywhere. These rotten banksters are everywhere, addicted to power and money like the flies to shit. And they are going to extract it from the hard-working populace no matter what!

silverer's picture

Direct payment between people using PM cuts the banks out, doesn't it?

Jungle Jim's picture

Gold is dead. I'm dead. The walking dead.

silverer's picture

Take heart. Gold is not dead. What's dead is the assumption by Wall St. they will get a lot more time out of this. Maybe some money, but not a lot more time. Nothing has changed. The basics are still the same.

Want to feel better about gold and silver? Watch this video:

https://www.youtube.com/watch?v=iqatg5WNIvc

south40_dreams's picture

Because commie banker? Really?

Davidduke2000's picture

short term gain for long term pain as usual. 

DEMIZEN's picture

the golden knives are falling. take cover :)

silverer's picture

So, the election increased productivity that much? Awesome. They should hold elections quarterly.

Phillyguy's picture

The French “election” solves nothing at all. Rhetoric notwithstanding, the goal of both candidates is to maintain wealth distribution and class structure. Just as in the US, the average French person will continue experiencing a declining living standard, more austerity and war.  To quote Emma Goldman “If voting changed anything, they'd make it illegal.”

 

Ghordius's picture

it's refreshing to read about French politicians wanting to "maintain wealth distribution and class structure"

usually, it's the opposite, with the comment just saying: "they are socialists"

meanwhile, austerity* and war do not match. you need a lot of extra dough for war

(austerity*= the socialist word for balanced budgets)

Zepper's picture

What wallstreet? a bunch of fucking crap banks run by fucking criminals and the stock market run by algos. Who the fuck even works on wallstreet anymore. Pretty soon the floor of the NYSE will have animatronics. 

 

Wallstreet pfft. More like globalist, elistist billionaire economic colonialists stealing from everyone and making everyone poor.

VisionQuest's picture

Exactly. G-L-O-B-A-L-I-Z-A-T-I-O-N itself is THE challenge to world order. The word "globalization" is newspeak for greedy-ass corporate oligarchs offshoring the jobs of businesses they acquired thru LBO's and other forms of high-end ripoff. Minimize overhead, maximize profit. Psychopathic dehumanization. Big Oligarch Media spends billions of bytes & barrels of ink spinning the word "globalization" to promote the illusion of "globalization" as the normal world order.

HalEPeno's picture

So assuming everyone is correct and Le Pen is toast, the French have decided that the long term consequences of becoming an Islamic state and debt slave to Germany are preferable to the short term discomfort of a return to sovereignty.  

GotAFriendInBen's picture

Who would have ever figured it was this one event holding stocks back from ATH??

saudade's picture

The (((Alt-Right))) rebellion in Europe is almost contained. All going acording to plan.