In the end, it wasn’t even that close: Emmanuel Macron will be the next president of France, trouncing Marine Le Pen of the far-right Front National by better than 30 points. Even Le Pen’s own people, who didn’t actually expect to be walking into the Élysée Palace on Sunday and walking out of the euro on Monday, didn’t think they’d lose by more than 20. The honor of the French republic is saved, and with it the European Union, for the time being, anyway.
The margin may have been somewhat larger than expected, but the result shouldn’t surprise any but the most grandiosely delusional poll skeptic. Macron’s lead after the election's first round never dipped below the high teens, and it probably shouldn’t shock anyone that France is about 10% less enamored of the idea of rounding people up and shipping them away than we are in the U.S., what with having experience doing so—regardless of Le Pen’s reinterpretation of that particularly unpleasant moment of French history. There’s also no evidence that Trump’s father is a Holocaust denier.
Still, the man France turned to to beat back Fascism is a bit of a surprise: A 39-year-old political neophyte and ideologically bereft former investment banker. And not just any investment banker—a Rothschild investment banker. Cue spooky music, fears of global domination and thinly-veiled anti-Semitism.
To Macron’s credit, he didn’t run away from his past. Facing an electorate, about half of which would go on to vote for specifically anti-capitalist candidate—either Le Pen, the far-left Jean-Luc Mélenchon, Socialist Benoît Hamon or one of a handful of fringe players—he made no bones about his pro-business leanings. In spite of his former political affiliation with the Socialists, he’s an unabashed capitalist, albeit of a distinctly French variety. This may not go over very well, given that, in the second round, almost 60% of French people voted for Le Pen or didn’t vote at all—and the latter we presumably not casting a silent vote of support for Macron and the invisible hand. Oh yea, and Macron’s party has exactly zero of the 289 votes in Parliament he’ll need to get his labor reforms and other legislation through parliament, at least until next month’s elections (that's right: After two rounds of presidential balloting, French people have to vote two more times to elect a National Assembly), during which he’ll have to hope that significantly less than 60% of French people vote against his agenda.
For investors, Mr. Macron’s victory matters mostly because of who he isn’t. For the next five years, there is no risk of France quitting the euro, taking away much of the risk priced into French bonds in the buildup to the election….
Mr. Macron’s victory is good news for investors, Europe is recovering perfectly well and investors ought to have some exposure to the region. Like Mr. Macron’s voters, it is hard to be any more enthusiastic.
The euro was recently down 0.5% to $1.0944, off Sunday’s highs of above $1.10. Investors drove the euro to a seven-month high against the dollar after Emmanuel Macron’s victory over anti-euro candidate Marine Le Pen in Sunday’s French presidential election.
The euro later gave up those gains as investors took profits on the widely anticipated result.
Why Macron Won: Luck, Skill and France’s Dark History [NYT]
Emmanuel Macron Embraces E.U. to Put France ‘Back in the Picture’ [NYT]
To Understand Macron’s Economic Vision, Look to France’s ‘Last Chance’ Students [NYT]
Will Emmanuel Macron Be Able to Run France If He Wins the Presidency? [WSJ]
A record number of French voters cast their ballots for nobody [CNN]
It’s Time to Buy European Stocks—Sorta, Kinda, Maybe [WSJ]
Euro Slips as Traders Take Profits on French Election [WSJ]