Monthly House View - July 2024 - Download here [ENG]
Monthly House View - July 2024 - Download here [CN]

Never before in the history of mankind has there been an election year quite like 2024. It will set a world record with half of humanity going to the polls in 68 countries.

All eyes have been on the November elections in the United States, which will likely be intense. Donald Trump will be sentenced on 11 July after being found guilty on 34 counts in the Stormy Daniels case. In theory, he could face up to four years in prison. Political polarisation is extremely high and US society is divided by extreme social and economic disparities. In the first quarter of 2024, the top 10% of the population held two-thirds of the wealth and the bottom 50% held only 2.5%. It is worth noting that the country’s Canadian neighbours have even included the possibility of civil war in the United States in their risk scenarios due to escalating ideological divisions, democratic erosion and violence. Such a scenario would have an extremely strong impact, although its likelihood of occurrence is, in fact, virtually nil. The actions by Quebec’s pro-independence militants in the 1960s, while not remotely a civil war, disrupted the local order for a decade, culminating in the October 1970 crisis, and this memory remains fresh in Canadians’ minds.

As the focus had mostly been on the other side of the Atlantic, little did we know that there would be a major plot twist in the European elections. We had been concerned about the potential fragmentation and polarisation of the European Parliament due to rising extremism. Ultimately, however, the conservatives (European People’s Party or EPP) remained very stable, retaining the majority and even gaining a few seats. Note that the ecologists, centrists and liberals (Renew Europe) lost ground, while the far right made some inroads (coming out on top in France and Austria). The far left, in contrast, remained stable.

The polarisation surprise came where it was least expected, when Emmanuel Macron dissolved the National Assembly on the night of the European elections. The results of the new legislative elections will be known after the second round of voting on 7 July. Alliances were quickly formed against the President’s party, ultimately creating two major blocs: the far right (the National Rally, i.e. the Rassemblement National or RN) and the left’s alliance with the far left (the New Popular Front, i.e. the Nouveau Front Populaire or NFP).

The French equity market and French debt were immediately penalised by this climate of political uncertainty; there is now a real possibility that President Emmanuel Macron will have to govern with a prime minister from another party. In this volatile environment, it may make sense to identify market asymmetries and take advantage of potential opportunities. In addition, the US market seems unflappable and continues to hit record highs, driven by shares of NVIDIA, which has accounted for more than one-third of the S&P 500’s performance since the beginning of the year. The company is now the symbol of the artificial intelligence (AI) revolution and has become the world’s largest capitalisation at more than 3’000 billion dollars. This rise is unprecedented. Its capitalisation has increased tenfold in four years. The question now is who will be the next champion? As was the case for General Electric in 2000 and Exxon in 2007, the future will likely belong to the company that can reinvent and store the energy of tomorrow. In the meantime, our focus in this issue is on our oil analysis. 

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_{Monthly House View, 20.06.2024. - Excerpt of the Editorial}