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Sunday's French Election "Makes Sense Socionomically"

Our European Markets Analyst weighs in on the important election

by Alexandra Lienhard
Updated: April 19, 2017

Brian Whitmer, the editor of our European Financial Forecast and Global Market Perspective contributor, tells you what he's watching as France is headed into its historic election. Brian explains how mixed social mood translates into the tight race at the polls.


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[Editor's note: The text version of the video is below.]

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[Editor's note: The text version of the video is below.]

Alexandra Lienhard: The first part of the French election is just around the corner, and joining me today to offer some perspective, is European market analyst Brian Whitmer, who edits Elliott Wave International's European Financial Forecast, and contributes to the monthly Global Market Perspective. Hi, Brian.

Brian Whitmer: Hey, Alex.

AL: So what are you watching both before and after heading into the French election?

BW: Well, I think it's interesting, you know, that we have not one, but two political extremists on the ballot. And both are still in contention. Le Pen on the far right, Melenchon on the far left. We also have a four way race, which I believe is unprecedented, into the first round, and it's too close to call. And that kind of makes sense socionomically. I mean, elevated mood favors incumbents, it favors the centrists, depressed mood favors populist and outsiders. So if we look at the CAC 40, stocks are way up over the past nine years. I've said before that optimism definitely favors the centrist candidate, who's Macron in this case, but at the same time, shares are lower than they were in 2007, they're lower than they were in 2000, even. So it's a mixed mood, which translates to a tight race in the polls.

AL: And, of course, the dominant story out of Europe these days is a snap election in the UK. So heading into the June 8th election, same question, what are you focused on?

BW: Well, I'll tell you, with the FTSE at all time highs, I'm more focused on the anti-Brexit crowd. I'm focused on the group that voted to stay in Europe. Yes, Theresa May, she needs to strengthen her political backing before negotiating Brexit, that's the reason for this snap election. But keep in mind, it was a very narrow win for the Leave camp a year ago. And holding a new election in June, that's going to give the stay voters a whole new opportunity to at least be heard. I mean, you've got Scotland now, they want to leave the UK in order to stay in Europe. You throw in curveballs like the European Banking Authority, the European Medicines Agency, these are European agencies that may stay in London after Brexit. So these will be messy negotiations. Last year it was easy for the leave voters. They pointed to Brexit, they said, we won, and they started celebrating. I think it's nowhere near that simple. It's going to be a complicated negotiation, and if the leave camp isn't careful, they could end up with an even more complicated and even more bureaucratic relationship with Europe, precisely what they sought to avoid.

AL: Now, chatter seems to be growing that the French election, or even Brexit before that, will be crucial to the future of the European Union. Brian, in your opinion, is this just media hype?

BW: No, I don't think it's all hype. I mean these votes, these elections, they will impact the European Union, at least in terms of the political framework. I mean, the EU may very well not exist a decade from now. The Euro may very well go away in the next decade. I think with the media kind of misunderstands is that these elections, they're not driving the trend for the EU to disband. Whoever wins power next month or next year, they won't cause the Eurozone to break up. What is causing those trends is the pessimism that comes alongside a negative mood trend. These elections are really the result of a shift in mood that began 17 years ago. That's what we study here at EWI, and that's maybe what the media should focus more attention on. Because frankly, it's not over.

AL: Well, a lot coming up in here and keep our eye on. Thanks for talking today, Brian.

BW: Thanks, Alex.