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We’ll start with France…

Macro Monday, a focus on France and their elections, aftermath of the Trump-Biden debate, climate change ideas for new UK government, and what's happening this week.

Macro Monday
The total value of the England football team is £1.06 billion. The total value of Slovakia’s team is £130 million – and it took until the 95th minute for that £930m difference to pay off!

We’ll start with France…

where Marine Le Pen’s National Rally party won 34% of the votes cast in yesterday’s first round of elections. As has been the trend in recent years, France is becoming a nation divided, with the far right taking the top spot and the left-wing alliance coming in second. Macron’s centrist alliance trailed a pretty distant third.

With such a majority in the first round, pollsters are understandably predicting a win and a big majority for Le Pen in the second-round next weekend. However, there are doubts about whether National Rally will win enough seats for an outright majority. On the back of this, markets have set an upbeat tone as we go into this trading week, with equity futures pointing higher, the euro trading relatively strongly, and French bond yields dropping slightly.

This reaction will be a welcome relief for the European establishment, which over the last couple of weeks has seen French government debt look more like that of Greece and Spain, and the euro had been on the ropes since Macron called the snap election. The less likely scenario of an outright majority means that any coalition, though led by National Rally, will have some fiscal constraints placed on them and won’t be able to go straight down the path of ‘Trussonomics,’ which could well be the plan if they do win more than 289 seats next weekend.

Across the Pond

Joe Biden has been in talks with his family over the weekend, working out what’s next after a comprehensively terrible performance in the head-to-head debate against Trump last week.

There are three options for him really – come out swinging, go to ground and hope Trump implodes all by himself, or bow out gracefully and let a newer (read: younger) breed of Democrat go up against Trump.

It’s only really Jill Biden that Joe will listen to and it’s not entirely clear how we’d know which course of action he’d take. The Democratic National Convention is being held in mid-August, which is likely where any successor would be chosen. Betting odds have now narrowed massively, with Gavin Newsom, the governor of California being the frontrunner, with Kamala Harris in the mix too, and a surprising long shot is Michelle Obama.

We wait…

In the UK

The CBI has said that if the winner of this week’s general election were to put net zero at the heart of their strategy, the payoff could be a £57bn economic boost by 2030.

The CEO of the Confederation for British Industry is set to speak at a conference today, where she will slam leaders of both parties for their deafening silence on climate issues throughout this election campaign, saying that “the next government has got to be loud and proud in making green growth part of a new investor pitch for Brand Britain.”

This is a good point to make, as the sector grew by 9% last year, to £74bn, whilst the wider economy stood completely still.

It might be that Labour does have a plan for climate change (and maybe for closer ties with Europe) but isn’t ready to put that in their marketing material for fear of giving the opposition an anchor issue to go after.

Anecdotally, I met my Labour candidate at the weekend and in a 15-minute grilling, I couldn’t get him to be drawn on anything more granular than “getting the economy going” and having a “fully costed manifesto” – so he gets an A* for toeing the party line!

Looking to this week

It’s the first week of a new month, so data will be printed thick and fast. That said, with the UK and French elections taking centre stage on this side of the Pond, we’ll defer to US data to drive any meaningful impact on the market – and to that, we’d look at Non-Farm Payrolls on Friday, though with it being Independence Day on Thursday, we can’t imagine many Americans sitting at their desks on Friday eagerly awaiting the number!

Have a great week.

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