French Presidential Election Melenchon – Dark Horse Candidate
The first round of voting will take place within two weeks, on April 23rd. Much of the campaign has developed along the lines that we laid out in our early December SMI forecast. However, there have recently been some significant shifts which could shake things up going into the first round. In this post, we will cover how our early Social Media Influence (SMI) based election forecasts turned out and how such forecasts could change.
In early December, the SMI forecasted that:
- Fillon (Republican, right) would decline in polls and his betting market probability would ‘fall dramatically’,
- Le Pen (National Front, populist) would decline slightly and end up not dominating the election as many had feared,
- Macron (Independent, center-left) would ‘surge in the polls’ and end up ‘winning the election’, and
- Melenchon (Left Party, far-left) could become the ‘dark horse candidate’ as his SMI was so much stronger than his polls, he could surprise many by significantly outperforming expectations and coming within striking distance of the leader.
These forecasts were very much out-of-consensus at the time but have been fairly accurate especially in such a volatile political environment. Predictit (betting / prediction site) in early December placed the probability of winning at 61% for Fillon, 32% for Le Pen, 8% for Macron, and 1% for Melenchon. Today, the same betting site puts the probabilities at 9% for Fillon, 28% for Le Pen, 60% for Macron, and 12% for Melenchon.
Forecasting is never easy and becomes further complicated when your forecasts go so far against what polls and betting markets are stating. But, in this case, the SMI forecasts from early December have proven exceptional. Macron has in fact surged and is currently the accepted front-runner. Le Pen’s poll and betting market figures are slightly worse than in December, which likely has surprised most observers who expected a repeat of Brexit and Trump upsets. Fillon, the front-runner in December, has essentially collapsed. And, Melenchon has gone from a non-entity (having had a 1% probability of winning) to a solid third place.
Melenchon has attracted a significant amount of attention in the media recently and his current poll surge is portrayed as a surprise. By looking at our observations of Melenchon in our December post, we can see that a surge was not only possible but also seen as a real possibility. From that December post:
Melenchon’s SMI is also significantly outperforming in relative terms as compared to his poll figures. Like Macron, he had been a member of the Socialist Party and later founded his own political party, the Left Party which is to the left of the Socialist Party. Melenchon is the dark horse candidate of this election in that the betting markets have almost completely disregarded his chances but his SMI, though showing him in fifth place, is actually within striking distance of the second position which would qualify him for the second round. Though the SMI is not forecasting him to make the second round, Melenchon shows how betting markets / polls can produce such different observations than those made from the SMI.
To date, the SMI has done an outstanding job during the 2017 French Presidential Election.
Forward looking SMI forecasts, however, have become cloudier. The fact that we are so close to the start of voting with some SMIs swinging wildly throws unexpected volatility into the mix.
SMI still favors Macron winning the election. Since November, his SMI has shown outsized influence on social media making him an attractive candidate. Furthermore, his SMI ratings have been very consistent throughout the campaign – that is, until very recently when they have marginally declined due to surges in other candidates.
During and after the most recent two presidential debates, Melenchon and Poutou surged in SMI. Poutou has not been able to effectively maintain a relatively high SMI and is not considered a serious contender. Melenchon, on the other hand, has held on to much of his SMI gains from the debates and is challenging Macron for SMI leadership. This is a potentially dramatic turn of events. Betting markets show Melenchon in third place, just in front of Fillon, and polls show him in fourth place, just behind Fillon. His SMI, in contrast, shows him in second place, just behind Macron, the front-runner. Accordingly, as his SMI is relatively stronger than his polls and betting market shares, we would expect him to further his gains as SMI should pull him higher.
Over the next two weeks, we will highlight shifts in the SMI with special focus on if Melenchon can maintain his post-debate SMI surge. Essentially, one of two scenarios will emerge;
- Melenchon’s SMI declining significantly going into voting would indicate that his SMI surge was temporary and more based off of short-term factors such as surprisingly strong debate performances and not on strong underlying voter support, and
- Melenchon’s SMI remaining high going into voting would indicate that he will transform his outsized social media influence into votes which would really produce a massive shake-up of the landscape.
Considering the first case, the election scenario would continue to be Macron and Le Pen going to the second round with Macron winning. This is the consensus view of the polls and betting markets at present which implies little volatility going forward.
The second scenario would take almost everyone off-guard. If Melenchon’s SMI remains at present levels, the first round of voting would likely turn into a tight three way race between Melenchon (far-left), Macron (center-left), and Le Pen (far-right, populist).
This would throw our previous forecasts up in the air. It could also produce major volatility for the financial markets as they have been focusing on Macron and, to a lesser extent, Le Pen for months now. Melenchon proving a serious challenge to them and threatening to move to the second round would scare the markets as it would underline the weakness of polls in the current environment (placing doubt over the second round outcome). Under the scenario where Melenchon finishes in the top two and moves to the second round, markets would react negatively as many of his policies (extremely aggressive taxes on high earners, anti-Nato, anti-globalism, decreasing retirement age, and Euroskepticism) are not pro-market.
Conceivably, you could have a Melenchon versus Le Pen second round which would put two Euroskeptics against one another, virtually guaranteeing Euro-market volatility going forward.
So, a lot depends on how the SMI moves over the coming weeks. Depending on these movements, we could change our election forecast from a strong Macron victory.
Additionally, it is interesting to highlight the anti-establishment nature of this election. For decades, France has been dominated by relatively mainstream parties. Except for the National Front making it to the second round in the 2002 presidential election (where it received less than 20% of the vote), France has followed established parties and/or well-known politicians. The 2017 election is different in that the establishment parties (Republican and Socialist) are not expected to perform well while the poll and SMI leaders are all anti-establishment to different degrees. Macron is not even 40 years old, is running as an Independent, and generally campaigns against the established system. Le Pen is an unabashed populist and openly discusses tearing down current structures. Melenchon is an unabashed hard leftist and has openly called for the creation of the ‘Sixth Republic’, implying that current Fifth Republic is no longer useful and that France needs a new political structure.
It seems that many, especially in the media, have misinterpreted the global trends towards anti-establishment politics as being a tide of rising populism. The SMI has shown that politicians gaining traction in multiple countries have been helped due to anti-establishment stances. Populism is anti-establishment in most countries and therefore qualifies. But, this is not a populist wave taking over the world but an anti-establishment one. France helps to make this point clear. Le Pen, France’s populist, is not dominating but is fighting it out with an Independent and a hard-line leftist neither of whom were seen as having any serious chances of winning the election at the end of last year, less than 5 months ago. Put another way, the 2017 French Presidential Election will be remembered as an anti-establishment competition and not a populist versus establishment one.
