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Thu, 29th June 2017

Anirudh Sethi Report

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Archives of “Voting” Tag

Merkel victory in German state election

Plenty of politics in the early part of the forex week

French election, of course,
  • French election results, official counts coming now 
  • Macron wins French election – EUR higher (early price indications)
  • French election results – Le Pen concedes defeat
And, in Germany –
An election in the German state of Schleswig-Holstein:
  • Chancellor Merkel’s conservative party won, her  Christian Democrats on 33-odd % of the vote (initial result)
  • The Social Democrats had been in power, but only won 26.5%
Polls had been predicting a much tighter result, so an outperformance by Merkel’s party here
And, while your here, rates update:

French election – 95% counted: Macron 23.85%, Le Pen 21.58%

France’s Interior Ministry counting continues

95+ % of votes now counted in this first round. Results refining, Macron adding a few 2nd place decimals to his lead:
  • Macron 23.85%
  • Le Pen 21.58%
ps.
  • Fillon 19.96%
  • Melenchon 19.49%
The second, and final round will be a Macron, Le Pen runoff
  • Latest opinion polls: Opinion polls for 2nd round released: 60%+ Macron, Le Pen around 40%
  • The second round is two weeks off: When is the final round of the French election? (Spoiler alert, May 7)

Macron, Le Pen Take Lead In French Presidential Election: Live Feed

The first results are in and according to IPSOS exit polls, Macron leads with 23.7% of the vote, Le Pen is second with 21.7%, with Fillon and Mellenchon tied for third at 19.5%. However, according to official results, from the French interior ministry, Le Pen is leading with 24.3% of the vote, Macron is at 21.4%, while Fillon has 20.3%.

Meanwhile, according to French official data:

  • LE PEN GETS 24.2% IN FRENCH INTERIOR MINISTRY PRELIMINARY COUNT
  • MACRON GETS 21.4% IN FRENCH INTERIOR MINISTRY PRELIMINARY

And an update:

  • LE PEN AT 24.9%, MACRON AT 21.1%: INTERIOR MINISTRY AT 8:13PM
  • FILLON AT 20%, MELENCHON AT 18%%: INTERIOR MINISTRY AT 8:13PM
  • FRENCH INTERIOR MINISTRY 8:13PM DATA BASED ON 5.25M VOTERS

Elsewhere, Benoit Hamon, the candidate for the incumbent Parti Socialiste of Francois Hollande, has just conceded defeat after a dismal showing of around 6%. He spoke to supporters and the press in a packed out hall and made an instantaneous endorsement for Emmanuel Macron.

  • HAMON SAYS ENDORSES MACRON TO BEAT LE PEN IN SECOND ROUND: BBG

Earlier:

While we urge taking early polls with a big grain of salt, according to a Harris poll, Macron is in the lead with 24.5% of the vote, follow by Melenchon and Le Pen in second place with 20% of the vote.

  •     Macron (EM-*): 24.5%
  •     Melenchon (FI-LEFT): 20%
  •     Le Pen (FN-ENF): 20%
  •     Fillon (LR-EPP): 18%

 

Complete Guide To Sunday’s French Presidential Elections First Round

Ahead of Sunday’s first round of the French election, we have previously provided several perspectives on the political and economic outcomes, including a permutation matrix of all six possible outcomes in terms of “high” vs “low market risk” (from BofA), why the market may be too complacent about a Le Pen – Melenchon result (candidate approval variance is within the polling error), and that European stocks have completely failed to price in any adverse outcome (as DB observed yesterday).

So with markets now closed, and all bets off, if only for the next two days until the results emerge, here is a complete guide to the first round of the first elections, compiled based on research reports by Deutsche Bank and Citigroup.

Guide to the French elections first round, from Deutsche Bank and Citi

Summary:

  • The first round of the French Presidential elections will be held on Sunday 23rd April.
  • Most polling stations will close at 7pm local time but some will remain open until 8pm local time. The first exit polls should be published at 8pm but may have to be taken cautiously. By midnight local time we could expect to have a clear picture of who would make it to the second round.
  • Since publication of our initial comprehensive piece on the French elections, the polls for the four major candidates have narrowed considerably and Mélenchon has replaced Hamon on the left wing. The narrowing of the polls and the historical error in actual voting relative to polls makes any of the six outcomes involving the four major candidates possible.
  • In order of decreasing likelihood the potential outcomes are (1) Macron vs. Le Pen (2) Le Pen vs. Fillon (3) Macron vs. Mélenchon (4) Le Pen vs. Mélenchon (5) Macron vs. Fillon and (6) Mélenchon vs. Fillon.
  • Based on current polls, in our baseline scenario of Macron vs. Le Pen in the second, Macron is expected to win comfortably. Le Pen would have to win the first round with a gap of 5pp or more and/or the participation rate in the second round to fall below 60% for her chances to improve significantly.
  • We assess the expect market impact on bond markets based on expected yield and spread levels for a presidential win for the four candidates and indicative probabilities of a win for the candidates in the second round conditional on the outcome of the first round.
  • Macron is favoured to win against all candidates if he makes it to the second round. Based on current polls market concerns about French elections should recede considerably in any outcome with Macron in the second round.
  • OAT-Bund spreads have the greatest room to widen in case of a Mélenchon vs. Le Pen outcome, while it has the most room to tighten in case of a Macron vs. Fillon outcome. However, in the latter scenario the tightening in OAT-Bund spreads should be more than offset by the rise in Bund yields leaving OAT yields broadly unchanged.

See the new French election poll, it’s similar to the old French election poll

Macron still seen as the winner in Elabe poll

  • Macron 23.0% (+0.5%)
  • Le Pen 22.5% (-0.5%)
  • Fillon 19.5% (+0.5%)
  • Melechon 19.5% (+0.5%)

What gets me about these polls is the lack of variance. They’re always so similar. Should they range around in the 2-3% margin of error?

In any case, Macron wins the runoff handily, no matter who he faces.

How Marine Le Pen is facing wipe out in French election after COMPUTER BLUNDER

Le Pen

Despite leading in the polls for Round One, The Express reports that a monumental computer blunder could cost Marine Le Pen the French general election as 500,000 citizens living outside of France have the chance to vote twice.

The election has become extremely close with just 4.5 percentage points separating Macron, Fillon, Mélenchon, and Le Pen…

Which is why this shocking error in election procedures could be the swing to crush Le Pen’s hopes. As The Express reports, half a million people received duplicate polling cards in the post, which would allow them to cast two votes at the first round of the election, held on April 23.

French authorities confirmed they would not be investigating the potential electoral fraud until AFTER the election, when retrospective prosecution may take place.

We are sure this is a simple ‘accident’, but coincidentally (for the establishment), this could crush Ms Le Pen’s dreams of surging to power, as most French nationals living outside of their country are not right wing – demonstrated by the fact many feel they depend on the European Union (EU) to guarantee their stay in foreign countries. Far left candidate Jean-Luc Melenchon, who has surged in the polls recently and threatens to break into the leadership race against Ms Le Pen and Mr Macron, could also benefit from this catastrophic error.

Le Pen poll lead pushes Franco-German yield gap to new four-year high

Here we go again.

The premium investors are demanding to hold French over German 10-year debt has hit a fresh post-eurozone crisis high today – exceeding 0.81 percentage points for the first time since August 2012.

The yield gap has swollen to its highest in over four years this month, reflecting investor jitters about France’s upcoming and unpredictable presidential elections in three months’ time.

Ms Le Pen, who has promised to hold a referendum on France’s eurozone membership, is polling at 27 per cent in the first round vote, with her two main rivals, Francois Fillon and Emmanuel Macron tied at 20 per cent, according to latest collated polls from Opinionlab.

The prospect of a Le Pen presidency has spooked French bond investors with markets warily eyeing the apparent demise of her biggest rival, the right-wing Mr Fillon.

Someone Will Make A $100 Million Profit If Le Pen Wins

A payout of more than 100 million euros ($106 million) may be beckoning for options investors if the German 10-year yield drops to zero in the aftermath of France’s elections.

German 10-year bunds currently yield about 0.30 percent, so a decline to zero would represent a significant increase in demand for haven assets. That would mirror moves seen after the U.K.’s Brexit vote.

As Le Pen’s odds of victory in the French elections rises, so the spread between ‘risky’ France and ‘safe-haven’ Germany has soared…

What will drive political uncertainty in 2017?

As 2016 draws to a close, a sense of unease is gripping many commentators as they look ahead. This year brought victories for Brexit and Donald Trump. The outcome of both votes were largely unexpected. What will 2017 bring? The EU is facing three, or even four, elections in major member states. The Netherlands, France, Germany and possibly also Italy will go to the polls. The outcome in all four elections is far from certain at this stage. Indeed, voting behavior seems to have become difficult to predict.

Economic and sociological research points to a number of different factors provoking these recent results. The debate is broadly about whether it is economic issues such as income inequality, cultural issues such as a rejection of equal rights for women, minorities and gay people, or factors relating to citizens’ perceived loss of control over their destiny that has driven people to support populist candidates and causes.

 At first sight, the economic factors seem to have played a strong role. The vote for Brexit predominantly came from the countryside, where GDP per capita levels are significantly lower than in the cities. Moreover, income inequality levels are much higher in the United States and the U.K. than in continental Europe. And indeed, one can show that the Brexit vote is significantly affected by regional income inequality though the effect may not be very large.

The second explanation is a rejection of progressive cultural norms. An interesting study by Ingelhart and Norris emphasizes very much this aspect. They offer evidence that the recent protest votes are a cultural backlash against progressive values. And indeed, discourse especially on social media has totally changed. Unfortunately, it seems to have become widely acceptable to talk of white supremacy and engage in racist discourse.

Here’s How Trump Could Still Actually ‘Lose’ The Presidential Election

On Wednesday night, controversial filmmaker Michael Moore made yet another mind-numbing prediction: He strongly suggested to late-night talk show host Seth Meyers that the Electoral College would deny President-elect Donald Trump a victory prior to his January 20th, 2017 inauguration. Moore previously stunned everyone by predicting Trump’s victory at a time when the analytics — and the political-media establishment — all favored Hillary Clinton.

There is a mechanism for what Moore is suggesting, however unlikely, and it exists within the Electoral College itself in the form of a decentralized, existential bunch of wonks. And, historically speaking, they have never actually asserted their power and changed a presidential election. They’re called ‘faithless electors,’ people nominated to represent the will of the people but who may, constitutionally speaking, revoke their duties. So far, there are seven ‘faithless electors’ who have defected from voting for Trump in the Electoral College. Count ‘em, seven — out of 270. That’s not a lot, obviously, but the mind balks at how quickly momentum could swing against a candidate that garnered over 2.5 million fewer votes than his challenger in the popular vote.

As of Thursday evening, the first Republican ‘faithless elector’ declared he would not vote Trump and that the presidency “is not a done deal.”

Here are three reasons why I believe Trump could, incredibly, still lose this election:

Trump has revealed himself to be fully in support of the establishment.

With his selections for pretty much the full gamut of cabinet positions, Trump has revealed himself to be an establishmentfigure, which is exactly the perception he ran against. Will his voters turn against him? Mostly no (or, at least, not yet). Will the other 74.5 percent of Americans who did not support him reject his victory? Possibly. Will this alone cause Trump to end up losing the vaunted Electoral College? No. Of course not! That’s why there are two more reasons.

Hillary won the popular vote by over 2.5 million.

This is fact. The number is actually growing. It’s historic; it’s actually disgusting if one is prone to be disgusted by electoral politics. Will this alone — or in conjunction with reason one — cause Trump to lose? No. Of course not! That’s why there’s one more, important, reason.

Elections can be stolen.

This happens. It happens more than you think. Usually, it happens before the popular vote – you know, when the votes are actually coming in, in the form of vote flipping and “magic fractions.” The 2000 election was stolen for Bush, the 2004 electionwas stolen again for Bush, and the Obama elections probably would have been stolen except that he won by such huge margins it would have been obvious. And many, many elections have been rigged or gerrymandered in some way.