France: BNP Paribas

 

The business meetings we’ve had on our Investment Trek have been outstanding.  As you can imagine, trying to connect the dots between an independent RIA in Salt Lake City, Utah to various government agencies, central banks, exchanges, ETF providers, research firms, index/data providers, investment banks, and other asset managers has been no small task.  We reached in to the Lunt Capital network and asked for introductions or local contacts from many of our business partners.  And our partners responded in a big way.  We can’t thank them enough for their willingness to connect us with their colleagues and/or amazing connections throughout the globe.

One such amazing connection came through Fabrice Hugon at Elkhorn Investments, LLC.  As a native of France, Fabrice maintains a great network of investment professionals and economic specialists in France.  Fabrice graciously reached into his bag of tricks and pulled out an amazing connection to BNP Paribas’ Group Chief Economist, William De Vijlder.  I learned in subsequent conversations that this was no small accomplishment to land a meeting with William.  He’s a widely regarded, and often cited, expert on many things, including both the French and European economies.

If you’d like to read more from William, you’re in luck.  He’s a prolific blogger, a regular Twitter contributor, and just one of 500 LinkedIn Influencers worldwide.  Here’s his blog site.  His Twitter handle is @DeVijlder.  His LinkedIn Influencer page is http://linkd.in/1rJUrU6.

I likely won’t do our conversation justice here, so I thought I’d share some links to his direct works so you can benefit from his amazing breadth and depth of knowledge.

William had just returned from holidays… and what a day it was to be back in the office.  In addition to the work that had piled up in his absence, Black Monday was in full swing, having put major dents in both Asia and Europe, and the U.S. was following suit.

Ryan Hessenthaler with William De Vijlder

Despite these issues, William still graciously met with me and shared some amazing insights.  As I’ve noted in other blog postings, I won’t attempt to provide a comprehensive report of everything we discussed in this forum.  If you’re interested in some of the more nuanced topics or the “gems” from the meeting that won’t be posted broadly at this point, please feel free to reach out to me at ryan@luntcapital.com.

Given William’s background, resume and position, his opinions and thoughts carry significant weight.  We started with the Black Monday market melt-down.  He noted that what’s happening in China is impacting markets over the short-term, but that a widespread financial contagion emerging from the current market volatility is not likely.  The world is suffering from a commodity slump, but the boost from cheap oil is dampening some of that effect.  Markets are being driven by psychology right now, not by larger structural issues.

Beyond China, the other driver of market volatility has been Greece.  Time has been bought with the latest agreement, but the ultimate fate of Greece is still very much in question.  William noted that economic growth in Greece will be an all-important metric to watch.  If Greece can’t grow, it will have difficulty paying back its financial obligations.  Beyond the financial implications of Greece (which are quite small in relative terms), there are moral hazard issues to consider.

William noted a “must read” for those wanting to gain a deeper understanding of the issues driving the Greek crisis can be found in the Financial Times.  The articles are a few weeks old now, but the broad issues of political contagion and radicalization in Europe remain a real concern.

http://www.ft.com/cms/s/0/f6872342-2bd2-11e5-acfb-cbd2e1c81cca.html#axzz3k4YWgHTF

http://blogs.ft.com/brusselsblog/2015/07/16/donald-tusk-interview-the-annotated-transcript/

William ran through many of the countries in Europe and shared a several important details about each.  He noted that in France, despite many lingering challenges, quite a lot has been done with policy in recent years.  Most French citizens and members of the press, however, don’t seem to recognize the progress.  He indicated that more needs to be done to highlight the successes and trumpet the progress that has been made.

We wrapped up the conversation on a familiar topic… the fact that progress, reforms, and positive change takes time.  Structural changes are vitally important, but citizens either don’t see the positives or only see the negatives with structural changes over the short term.  Because of this, it’s very hard to stick with them over the long term, but that’s precisely what’s required in order for structural changes to truly impact an economy.

It was a real pleasure to visit with William and benefit from his insights.  Thanks again to Fabrice Hugon for connecting the dots and to William De Vijlder for taking the time (on a very hectic market day) to talk with me.

 

Special thanks to Brennan Staheli, Michael Willden, and the Lunt Capital team for their contributions to this report.