The Better Choice Was A Socialist?
May 8, 2017
Dennis Gartman is editor and publisher of The Gartman Letter, and strategic advisor of the AdvisorShares Gartman Currency Hedged Gold ETFs (GEUR & GYEN). He regularly contributes to AlphaBaskets and lends his institutional insight to educate advisors and investors about commodities and the forex markets, including about trading gold in different currency terms.
The “big” news is of course the crushing victory by Mr. Macron over Ms. Le Pen in the French Presidential election, putting to rest… for the moment anyway… the fears that the political and monetary union there would be torn apart. Macron was and is the better of the two candidates, despite his generally left-of-center philosophies, for until he had established his own political party… En Marche… last year he had been a Cabinet official in the Socialist government of Mr. Hollande. We must always remember that fact, for although Mr. Macron is perhaps more pragmatic than other Socialists and has espoused far more “freer” market policies than other Socialists might ever have considered, he is still a Socialist at heart. Once KGB, always KGB, and once a Socialist always a Socialist.
We find it interesting then that the EUR has not rallied much… if at all…relative to the US dollar, for although it briefly traded to and barely through 1.1000 as the first official results of the presidential election were being made public, it has since settled back down and is now barely higher upon the day compared to the level we marked here on Friday. Perhaps, then, we have the makings of a text book, buy the rumor/sell the fact, circumstance.
Broadly, the trend of the EUR remains downward and as we said several times last week, after the steep collapse of the EUR in ’14 when it fell from nearly 1.4000 to just barely under 1.0500 for the briefest of times, it has been consolidating those losses since. Bounded by 1.0500 on the low side and by 1.1500 on the high side, the bounce from 1.0500 to 1.1000 in recent weeks appears to us to be corrective in nature rather than the start of a bull market. The election in France really should have given rise to a much stronger EUR and since it has not been able to sustain itself above 1.1000 our propensity is to be a seller of the EUR, not a buyer.