French Presidential Elections and Apple Computer

French elections and Apple computer are the two big issues in the markets this week. Here’s why:

  • APPL has gone into a correction this week and last week, losing about 5%.
  • On Sunday, the French held their presidential elections. Sarkozy and Hollande are the two run-off candidates, and this matters to the markets because each candidate has such a different approach to how to fix Europe’s debt crisis.

We need to be paying attention to the elections in France and the condition of the European debt crisis because it will undoubtedly have effects on our economy and markets. This article from The Week gives a good soundbite for why we are bringing this up:

“What has Hollande promised to do as president?
He has pledged to increasegovernment spending to spur economic growth. That position is the polar opposite of the policy Sarkozy and German Chancellor Angela Merkel have adopted, encouraging EU countries to cut spending to get their finances in line. The duo, who have worked together so closely that they’re referred to jointly as “Merkozy,” have shaped the EU’s response to the debt crisis, which shows no signs of abating.

Would Hollande’s proposals hurt or help Europe?
It depends whom you ask. Some economists say it ‘is likely to make matters worse, possibly sending financial markets into a tailspin that invites further chaos,’ says Steven Erlanger at The New York Times. Others say boosting economic growth is the key to getting Europe out of its funk. ‘An Hollande victory would shake things up, and offer at least a possibility of something better,’ says Paul Krugman at The New York Times. Plus, some European countries may be starting to turn against Merkozy’s prescriptions: The Dutch government will likely collapse over resistance to new austerity measures, and Spain and Italy are also siding with more pro-growth policies.”

We are keeping an eye on the news from Europe, and it will be interesting to see if France continues to embrace austerity, or if they spend more in an effort to get out of their current debt crisis.

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