Marine Le Pen has extended her lead in a poll of first round French voting intentions, which shows a sharp drop in support for her centrist rival Emmanuel Macron in the last week.
A poll conducted by Elabe for French broadcaster BFMTV today showed at least a 1.5 point swing towards the far-right Front National leader who is vowing to hold a referendum on France’s membership of the eurozone.
The eurosceptic Ms Le Pen has around 27-28 per cent of the popular vote according to the poll which varies on whether or not centrist candidate Francois Bayrou will take part in the election race in less than three months’ time.
Mr Macron, the country’s former economy minister who is running on a pro-business, pro-EU ticket, dropped five points in the first round voting intentions compared to the same poll conducted on February 7. Mr Macron has fallen into third place behind right-wing candidate Francois Fillon.
Despite being engulfed in an embezzlement scandal this month, Mr Fillon gained 3 points to 20 per cent.
Too much of economic growth and the accompanying bull market in stocks is the result of financial engineering. Increasingly, companies seek to improve earnings or increase their share price by means that are not necessarily directly linked to their actual business.
Companies have increased the use of lower-cost debt financing, taking advantage of the tax deductibility of interest. In private equity transactions, the level of debt is especially high. Complex securities have been used to arbitrage ratings and tax rules to lower the cost of capital.
Mergers and acquisitions as well as various types of corporate restructurings (such as spin-offs and carve-outs) have been used to create “value.” Given the indifferent results of many such transactions, the major benefits appear to have accrued financially to corporate insiders, bankers, and consultants.
Share buybacks and capital returns, sometimes funded by debt, have been used to support share prices. In January 2008, prior to the global financial crisis, U.S. companies were using almost 40% of their cashflow to repurchase their own shares. Ominously, that position is similar today.
The Minutes of the Feb 1 FOMC meeting are due tomorrow at 2 pm ET. The commentary could make for a skewed picture of what the Fed currently believes.
On Feb 1, the Fed didn’t have the economic data it has now, especially the strong jobs, retail sales, manufacturing and CPI numbers. So the Minutes might not reflect the same level of optimism.
What makes them even less meaningful is that we’ve had two full days of testimony from Yellen since the meeting and plenty of Fed commentary, including Harker on Friday who had some hawkish words.
That said, no one is yet pointing directly at March 15 with any kind of urgency. The market currently pricing a 38% chance of a hike after hitting as high as 35% last week. That rises to 59% in May and 78% in June, with a 34% chance of two or more hikes.
One of the areas that was ambiguous in the Fed statement was inflation. The market is attempting to gauge the amount of confidence that policymakers have of rising prices. They’ve no doubt seen better signs on growth, employment and other data but that hasn’t always led to higher wages. Similarly, we may get signals on how much the Fed believes in improved sentiment surveys translating into a sustained pickup in economic growth.