Coming up later this week the French election could have impacts on the U.S economy and Global Markets. This election is so interesting because of the differences in economic ideas from the candidates. Marine LaPen is a radical anti-globalist that wants to remove France from the European Union, create new trade barriers and possibly drop the Euro and create a new lower value currency. This new currency she says will not only help the current national debt but make French exports more competitive. On the flip side, Emmanuel Macron is a former banker and socially liberal running on the policy of increasing the competitiveness of the economy by embracing globalization and free trade. He is a supporter of the Euro and remaining in the European Union.
So you might ask yourself, how does this affect the economy in the United States? People are beginning to question exactly what is going to happen if in fact France leaves the European Union. Some people suggest that the market will be just fine and react in a similar way to Brexit (United Kingdom leaving the European Union). “An outright victory by [far-right populist] Marine Le Pen in France is likely to trigger a global equity selloff but the U.S. stock market will be the first to recover,” said Diane Jaffee, senior portfolio manager at TCW. Others suggest that France leaving the European Union along with the UK will have a greater impact because of the magnitude of these nations. Also, could France leaving the EU open the door for other nations to leave the EU? This could create a bigger hit to the U.S stock exchange and global markets.
Personally, I believe that the overall markets will be fine. Markets tend to overreact to unexpected outcomes but in the end return to normal levels like we have seen with Brexit and the Trump election this past year.