Markets will be ‘upset’ if new French government does not commit to fiscal rules, European Central Bank’s vice-president says | Metals Mine

  • Markets will be ‘upset’ if new French government does not commit to fiscal rules, European Central Bank’s vice-president says

    From cnbc.com

    French markets will be “upset” if the country’s new government does not adhere to the European Central Bank’s new fiscal rules, Luis de Guindos, the institution’s vice president, said on Tuesday. De Guindos told CNBC’s Annette Weisbach that last month’s French bond market moves had not been a cause for concern that would require an ECB intervention. “What we have seen so far is that the evolution of [French] markets has been quite orderly,” he said in an interview at the ECB Forum on Central Banking in Sintra, Portugal. “We have seen a little bit of widening of spreads, but the situation has been ... (full story)

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ffghost
Jul 2, 2024 3:54pm
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Quoting Vancarbon
The issue is though , Mr ghost. There’s actually far bigger issues at stake than just you and I making “ money “ , although I do appreciate it is a financial forum. I refer you to the BIS statement this week : re fiscal deficit and debt. In fact , there’s so much more at stake here at this moment the majority are blind sided by the election narrative. People equate happiness with capital , hence missing the bigger picture and the direction of society. The US is broken electorally and financially , it’s just that most don’t see it yet.

First, I appreciate your respectful reply. Many others wouldn't have taken the time to read a reply vs spit out some combative rhetoric just for the sake of hearing themselves speak.

Second, I'll be the first to admit that I am not an economic PhD. However, I do believe a few things. 1 - the market tends to be forward looking (addressing the financial situation). It's signaling a better economy is on the horizon at present. Yes, crashes do occur (and most times they are soon after all time highs). However, the lack of a great depression-style event in the past 100 years gives me some hope. 2 - This is purely anecdotal, but I believe the current economic condition (in the US, as that is where I live) to be stronger than decades ago. The numbers being reported, the low unemployment, the low inflation (yes, we are at historically low levels), and the state of the equity markets all support this. 3 - The interdependence of global economic superpowers is what will help avoid catastrophic economic depressions like we saw during isolationist times of the early 1900s.

As for election narratives, I don't live in France (and therefore do not believe I can comment on how this affects the French people, nor how long a "bad" election cycle would take to rectify), but I can say that, in the US, people tend to go completely overboard with respect to presidential elections. Every 4 years a swath of the country thinks the world is going to end because xyz person was elected. 4 years later, nothing much changes.

As for the US being broken financially, I think (perhaps ignorantly, time will tell), that we are still living in a time of relativism. As bad as people feel this economy is, the question becomes: what economy would you RATHER put your money into? When that answer is no longer the US, then I think we'll see a big change on this side of the pond. Until then, I fear the elected officials (and consumers) live by the "if it ain't broke, don't fix it" mantra that has persisted since the end of World War 2.

Best of luck trading - may the pips be in your favor! Unless they go against my portfolio, then I hope you crash and burn!!! (just kidding) :-)
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ffghost
Jul 2, 2024 3:25pm
Permalink
Quoting Vancarbon
Yet , ironically the markets don’t give a f-ck about the US fiscal responsibility. It is approaching Independence Day and they’re so patriotic the market is obligated to close higher. Only in the US - the land of the free ( money)
FWIW, there are very few news outlets which aren't wrong as much as right. Total cliche I know (and, I'm probably being generous on the 50/50 ratio). Throw enough headlines at the wall, and something sticks. Worst case, people forget what you said last week and only focus on what fear mongering you're pushing this week.

French markets can get upset, but should the majority of us really care about that? You (others on here) may live in France (I'm not sure) and be more directly affected, but, if not, are those on this forum concerned with such things actively in French bonds/equities/maybe forex? If not, this is a non-issue (most likely...I have been known to eat words down the line). Let's just be happy that our bank accounts are going up.

So long as your annual gains are 10-20x the inflation impact to your spending, who cares, am I right? Sure, you could have "made" more if inflation were 1/2 of what it is now, but.....

Also, not knowing your age, 2001 was the last year of a balanced budget in the US, with only 4 times in the past 50 years of a surplus. If your definition of "fiscal responsibility" is not spending more than you take in (which is my definition), then we can both accept that the markets do NOT care about the lack of balancing and just move on to making money without that as a consideration. I'm not holding my breath for a once-a-decade event.

If the dollar were getting crushed globally along with all time market highs (as some other currencies are), then I might join you in my dismay. However, I think all of us on here can agree that isn't the case...nor is likely to happen any time soon. SO....despite what we might personally feel about the US fiscal situation, he markets believe things are pretty solid at the moment. Whether the market is a lot smarter than us or not is irrelevant; it is "right" (at least 'right now').

........all that said, I'm not sure I like the trajectory of the US debt....so let's hope I'll be dead before it adversely affects me :-P
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