Keep some powder dry to buy the French Dip.    That is,  the market panic over the  Euro elections,  if there is one.

The French will hold the populist “Maginot Line” and Le Pen will lose in the second round, “bigly“.  Polls can be wrong for maybe 3-5 points, but 32 points?   We don’t think so.  Nevertheless, have to allow for a small probability of a political shock from now until May 7th and markets are pricing it in.

Geert Wilders, the “Dutch Trump,” and his Freedom Party (PVV)  will win the most seats in the Netherlands lower house next month, maybe 35, but still needs 75 to form a government.  “Most other parties have vowed not to team up with him.”  Sorry, Geert, no prime ministership.   March 15th Dutch elections?  Yawn!

German elections?   Let’s think this through.

If Martin Schultz and his SPD-Green-Left coalition manage to defeat Angela Merkel on September 24th,  the country swings to the left of Merkel,  not to the hard right.  Schultz has called the right-wing parties “rat-catchers.”  The new government will be even more pro-EU than the Merkel government.

The world will definitely miss the strong leadership of Ms. Merkel as a check on President Trump, but Wolfgang Schäuble, her hardline finance minister will be gone.  Then, maybe, just maybe, Greece will get some meaningful debt relief and pro-growth policies in Southern Europe.    No panic here, comrades.

Italy?   We need to do more homework and get back to you.   The same with Portugal and Spain.  But our sense is and what we are seeing in the European street is that these countries are repelled and more willing to run away from Trump rather than attracted to and running to him.    Stay tuned.

The FT’s Katie Martin on what to watch for in markets on Wednesday, including French bonds spread over German Bunds widening as the threat of an exit from the euro looms with Marine Le Pen’s candidacy, and concerns over Greek debt and on US policies steering markets back to havens.

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