French Politics Rock The Boat 🚤

Did you know that France's economy is the second-largest in the Eurozone, making its political stability crucial for European markets?

Did you know that France's economy is the second-largest in the Eurozone, making its political stability crucial for European markets?

Keeping an eye on major European economies can provide valuable context for global investment strategies.

Here's what we have in store for you:

  • Bank Earnings Hold The Key: FIrst, with the S&P 500 and Nasdaq reaching new heights, the sustainability of this rally hinges on the second quarter earnings reports and upcoming inflation indicators 🏛️

  • France Gets Another Election Surprise: Next, a left-wing coalition in France has unexpectedly gained more legislative seats 😯

  • Trump’s New Running Mate Imperative: Finally, as the US presidential race intensifies, former President Trump faces the critical decision of selecting a running mate 🤔

Stay tuned as we take a look at these important topics, giving you insights and analyses to help you make informed investment decisions. Let’s go!

Bank Earnings Hold The Key 🏛️

The S&P 500 and Nasdaq keep hitting new highs.

But the continuation of the rally now depends on second quarter earnings and what the next round of inflation indicators looks like.

Earnings season starts this week with PepsiCo and Delta Air Lines reporting on July 12 with JP Morgan, Wells Fargo, Citigroup, and Bank of New York Mellon releasing results.

Analysts are predicting earnings growth of 8.8% for the S&P 500 in the second quarter, but the financials are only expected to post earnings growth of 4.3%.

But analysts are growing more optimistic about future bank earnings, which would be key as it would help broaden out the stock market rally 📢

France Gets Another Election Surprise 😯

In a surprise for markets, a left-wing coalition in France won more legislative seats than both the groups led by President Emmanuel Macron and a far-right group led by Marine Le Pen.

But there isn’t a clear majority, complicating the picture for Macron.

A party would need at least 289 seats in the 577-seat National Assembly to have an outright claim to form a government, and none of the three biggest came close.

The left and center parties teamed up to deny Le Pen’s RN Party a majority after it garnered the most votes in the first round of polling.

Candidates that finished third dropped out of individual races and encouraged their supporters to vote against RN, which ultimately gave RN far fewer seats in parliament than it had hoped for.

The results were unexpected, but not catastrophic for markets 🤷🏻

There will now probably be weeks of negotiating to see if the groups can come together to get over the majority hurdle.

After that, the government will have to work with Macron until 2027, when his term ends.

It could be a recipe for gridlock

The New Popular Front, as the left coalition is known, won 182 seats.

Macron and his allies secured 163.

Le Pen’s right wing RN party got 143 seats.

Macron has said he would remain president to the end of his term in 2027.

He now faces the task of governing alongside a left-wing group that opposes many of his domestic policies 😤

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Trump’s New Running Mate Imperative 🤔

President Biden’s decline and the Democratic Party’s turmoil have remade the dynamics of the election in a way that makes Trump the favorite.

The chaos also presents Mr. Trump with an opening to persuade more voters that he’s the safer choice, especially with his decision on a running mate.

As the GOP convention nears, and voters focus on the election, the race remains closer than it should be given Biden’s infirmities.

Swing voters still worry about Mr. Trump and the possibility of four more years of turmoil.

The former President can help his campaign, and the country, by projecting stability and calm 💪

We know many readers will think this is impossible, and maybe it is.

Yet he showed admirable restraint after the debate last week, letting Democrats implode, until his profane golf-cart outburst.

The opportunity is there to present a reassuring alternative if Trump wants to take it.

And he has a timely opening to send that message with his vice presidential choice next week 👀

Now leading in the polls, he doesn’t need an attack-dog VP or someone to rally his core voters.

He needs a choice who shows mature judgment and has the ability to appeal to anxious and undecided voters.

Virginia Gov. Glenn Youngkin would bring governing experience in a swing state that may be competitive this year.

He has business experience and would speak to suburban voters.

Youngkin hasn’t been on Mr. Trump’s short list, but the race has fundamentally changed since the debate.

Former Secretary of State Mike Pompeo has a reputation for competence and broad foreign-policy experience.

Of those on the supposed short list, North Dakota Gov. Doug Burgum also brings executive experience and a history of business success and knowledge about the economy.

Marco Rubio is a more familiar national figure, but as a Senator, he has no executive experience, and his past criticism of Mr. Trump will play in a loop on TV ads and social media.

The need for stability and experience should eliminate the young MAGA-in-a-hurry types like Sen. J.D. Vance or Members of the House.

They lack experience and wouldn’t be a reassuring contrast to Vice President Kamala Harris 🙅🏻

Republicans are understandably giddy about the Democratic troubles, but the country remains closely divided, and the election is a long way from over.

Democrats may find a way to nominate a more formidable candidate than Mr. Biden, and they are likely to unite behind whoever it is.

Mr. Trump needs a running mate who causes voters to stop and say: Yes, that person could be a good President 👍

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