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Analyst Who Predicted Trump’S Ascendancy Bets On Le Pen Win


Flashermac
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Don’t bank on a relief rally in the euro area anytime soon.

 

Markets are underpricing the prospect of Marine Le Pen emerging victorious in the French election as a sea of undecided voters throws into sharp relief pronounced apathy for center-leftist Emmanuel Macron -- the front-runner by a whisker -- and the backlash against the European Union project.

 

That’s the conclusion drawn by Charles Gave, founder of Hong-Kong based asset-allocation consultancy GaveKal Research, who predicted the triumph of Donald Trump in the U.S. election, and is now betting on a win for the anti-euro National Front candidate.

 

“Le Pen’s momentum is a slow-moving reaction against the men of Davos -- as we have seen with Brexit and Trump -- but markets don’t want to believe it,†he said by phone before the first round of the French poll on April 23.

 

Given the prospect of a Le Pen victory, Gave, who has been researching tactical asset allocation for more than 40 years, is advising clients to adopt long positioning in the pound as the U.K. would benefit from haven bids, and shorts on inflation-linked German bonds amid the risk of deflation in the euro area.

 

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If she emerges victorious, the euro would tank as markets would price in the prospect of its dissolution, rather than focus on Le Pen’s legislative hurdles to exit the single-currency bloc. French and Italian bonds will be “unquotable†given vanishing bids, and the European banking system would be beset by seismic turmoil, he said.

 

 

https://www.bloomber...g-on-le-pen-win

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