In the short term, the main beneficiary of Macron’s victory in the French presidential elections could be the euro, which last Friday was still flirting with two-year lows against the dollar. According to Frederic Leroux, Head of Cross Assets and member of Carmignac’s Strategic Investment Committee, there is not necessarily a reason to expect a massive outperformance of French or European equities relative to the United States considering that the European equity market has rather outperformed the US market in recent days. “For the markets, the downside of this rather quiet election could however come from a quick decision in favor of a Russian oil embargo that would aggravate inflationary pressures and the economic slowdown (stagflation scenario) in Europe”, explains the expert. .
But Carmignac’s strategist predicts that the real problems won’t be immediate. The question is whether the outcome of these elections is clear enough to anticipate that the parliamentary elections in June will give the President a majority that will allow him to implement his pro-business and pro-European policies desired by the markets. “It seems dangerous at this stage to take it for granted – argues Leroux -. In the long term, regardless of the geography of power, the main constraint on economic policies will be sustained inflation. It is not at all clear whether the economic programs on which the president and deputies are elected have been drawn up taking into account this reality, which is becoming more and more evident. And France is no exception in this sense “.