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Makets on the move

Just recently we discussed how markets were upbeat – almost eerily so – on Donald Trump. There were records to be set, and the financial community was looking forward to the reforms that would be enacted by the new president, whom they saw as a harbinger of deregulation. But that was then. President Trump’s first 100 days have since passed, along with the accompanying wave of euphoria. Investors now fear that political disharmony in Washington DC has put the US in a deadlock, making it unable to reform or change the way things stand.

Once upon a time, markets craved political stability and revelled in unselfconscious conservatism. Today, by contrast, they want movement, change and reform, so politicians can no longer afford to disappoint, for fear of a backlash. As the financial daily Les Echos said recently, “Markets have slumped on Trump’s setbacks. Global markets are worried that the president will be forced to quit before his term ends, thus triggering a major political crisis”. Writing in the same paper, Harvard law professor Alex Whiting confirmed that “the probability of impeachment is growing daily”. The editorialist Jacques Hubert-Rodier went a step further. Under the headline “Trump, or the permanent crisis”, he wrote “With Donald Trump, the worst always seems possible. Almost every day, a fresh batch of revelations spooks America’s political class”. And hence the markets.

France’s new president, Emmanuel Macron, is admittedly no Donald Trump. But, like his US counterpart, he has been anointed by investors. His decision to appoint ministers who know their brief has been welcomed, but the pressure will be fierce. There can be no question of disappointing, breaching commitments, failing to bring the French economy up to scratch, or rekindling the country’s spirit, because all our European partners are looking eagerly for a new French Revolution. What investors and major economic players are saying is “Now get down to work and produce results. Quickly!”

The political upheaval in Washington has sent markets into freefall. The assets of the world’s 500 wealthiest people have shrunk by $35 billion. Obviously, therefore, the richest investors are looking longingly at the new situation in France; they welcome the president’s youth and the newfound mood of political revival. But they are also warning: “Don’t let us down!”

Christian Moguérou

Sources: Le Figaro Economie, Harvard Business Review, Financial Times, Le Monde, Le Point, Les Echos

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