As a professional market operator, one should expect that I monitor a lot of moving parts around the world. Also, one shouldn't conclude that just because I may be well versed in global issues that I get it right all the time either :). So with that disclaimer out of the way, I ask myself, "Does the French, two-part election process even matter?"
You may or may not know that this Sunday, April 23rd, 2017, the first round of the French election process will take place. The second round (presuming there is one), takes place at the beginning of May. In my small circle of influence, this election is widely monitored. Why? The theory anyway, is that if Marine Le Pen is ultimately elected, that she would somehow pull France out of the EU causing Humpty Dumpty to fall off the wall, and well, you know the rest. From my perch, sorry to break (pun-intended) the news to you, but Humpty Dumpty has already fallen. In fact, to me, this election doesn't matter. Le Pen in or out, confidence has already been shaken. The trend, and ultimate fate, of Europe has been established. At this point, there really isn't anything to do but to simply observe. The eventual crash and burn of the European Union is just part of the cycle. While painful, it is the necessary part of all cycles. While sure, one can temporarily push asset prices a little farther in one direction or another, the trend ultimately is the victor. Successfully operating in the capital markets is a waiting game. I can't make anything happen. I have to wait. The opportunity to profit will arrive, the question is will you be of clear mind to observe it?
Let's be honest, the air has been seeping out of the balloon for awhile. Whether it pops sooner or later doesn't seem like very a good risk-reward trade off. The risk is skewed to the downside in either case. The market will come to me, for now, "I'm just sittin'."
Humbly,
P. Franklin, Jr.
April 21st, 2017
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