France's Fallen Angels In Luxury And Banking
(MENAFN- The Arabian Post)
Matein Khalid
“O liberty, what crimes are committed in your name!”. So lamented a Girondist noblewoman as she gazed at the guillotine that would snuff out her life minutes later in Robespierre's reign of terror during the Great Revolution. French history then went dark. The Catholic-Royal revolt in the Vendée was crushed in literal rivers of blood. Napoleon's reign ended in the slaughter and defeat of Waterloo. Marshal Pétain's la France profonde degenerated in the grotesque nightmare of Vichy. The pieds-noirs, paras and torturers butchered a million Arabs but could not preserve the carcass of Algérie française.
De Gaulle midwifed the Fifth Republic but was cannibalized by his own creation in the student revolt of May 1968. Like Cameron in 2016, Macron took the political gamble of his career with a snap election whose political endgame will be the election of Marine Le Pen as the next occupant of the Élysée Palace in 2027.
French debt now trades at Greek 2012 level spreads above German Bunds. More than 50% of the 2.5 trillion Euro French government bond market is owned by global investors and hot money. The far-right and the far-left ganged up to kill the Budget of Macron's last PM Michel Barnier. There is no Mario Draghi with“whatever it takes” ECB Bazooka to save the Euro in its next existential crisis. Now Citizen Macron is a lame duck prisoner in his presidential palace and Marianne is nowhere to be seen.
LVMH, once the highest valued public company in Europe that boasts 60 luxury masons led by Dior, Louis Vuitton and Moët et Chandon, has plunged from 840 Euros last April to 611 Euros now. Luxury is now taboo in Xi's China. LVMH's most important market and the EU has also fallen on hard times. I see no reason why the shares cannot drop to 500 Euros as the valuation is still expensive and gross margins will not return to peak level.
See also
Currency crisis in two Sanskriti superstates
BNP Paribas was once my fav bank for a changing world and is still the old world's preeminent banking colossus with $2.6 trillion in assets with any hope of taking on GS/MS in investment banking, HSBC/JPM in corporate banking and UBS/Bank of Singapore (sans blague) in private banking. Its ROE is a stellar 12%, only 2 points below J.P. Morgan, the highest valued US money center bank. Yet it is valued at only 0.6X book while JPM trades above 2X book value. The bank is très cheap at 7X earnings as the shares have fallen from 73 to 58. Yet I cannot touch this bank as long as its OAT portfolio is radioactive.
The only silver lining in the French political malaise is that profits on short euro trade can be invested in a springtime sejour to revisit the chateaux of Loire as I can never get enough of Chambord, Amboise, Chenonceau, Azay and Villandry. The Loire Valley is the crucible of history in my most cherished country in Europe. As Hanri Quatre rightly observed, Paris is worth a mass!
Also published on Medium .
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