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“FRANCE IS UNINVESTABLE.” REALLY? WE THINK THE MARKETS COULD BE SETTING UP FOR A VERY INTERESTING END TO 2026.
Market Activity
Are the markets about to rally?
October 22, 2026
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Political chaos. Mounting debt. Falling share prices. Nervous investors.
On the surface, Europe doesn't exactly look like the place to be investing right now.
France is battling a fiscal crisis. Political uncertainty is dominating the headlines. Government borrowing costs are elevated. And French equities have been under significant pressure.
Meanwhile, across the Atlantic, investors are grappling with geopolitical tensions, inflation, the direction of interest rates and the approaching US midterm elections.
It's hardly surprising that some commentators are becoming increasingly pessimistic.
Some are even questioning whether France is investable at all.
At TPP, we see things rather differently.
In fact, we wouldn't be particularly surprised if European equities, and potentially global equity markets more broadly, staged a meaningful recovery between now and the end of 2026.
Not because we're expecting politicians to suddenly solve the world's problems.
Not because we're relying on the traditional Santa Claus rally.
And certainly not because we believe markets can only go up.
But because, beneath the political noise, we're beginning to see something that investors should pay very close attention to: VALUE.
And when good assets become available at increasingly attractive prices, history suggests opportunities can emerge.
Let's explain.
There's no point pretending France doesn't have problems.
It does.
Significant ones.
According to recent figures, France's public debt is approaching 120% of GDP, while its fiscal deficit is running at approximately 5.4% of GDP.
Those are uncomfortable numbers.
Government borrowing costs are elevated, political divisions are substantial, and uncertainty surrounding the country's fiscal direction has weighed heavily on investor confidence.
In recent weeks, French equities have also underperformed several European counterparts.
The CAC 40, France's leading equity index, is down approximately 4.4% since the beginning of 2026 (and 13% from it's high), compared with gains of around 3% in Germany, 6.4% in Italy and 10% in Spain.
That's quite a divergence.
And when markets start falling while political headlines become increasingly alarming, a familiar pattern tends to emerge.
Investors become nervous.
Some reduce exposure.
Others decide the country is simply too risky.
And eventually, the narrative becomes almost universally negative.
But here's the question we think investors should be asking:
Are French companies really becoming dramatically worse businesses? Or are their share prices simply reflecting an increasingly pessimistic outlook?
Because those are two very different things.
And understanding the difference is central to intelligent investing.
This is where we believe the discussion becomes particularly interesting.
France's public finances may be struggling.
But many of the companies listed on the French stock market are genuinely world-class businesses.
Consider some of the names represented in the CAC 40:
These companies aren't entirely dependent on the French consumer, French government spending or the performance of the domestic economy.
Far from it.
Many generate substantial revenues internationally.
Indeed, the recent analysis cited estimates from EY suggesting that approximately 75% of CAC 40 revenues are generated outside France.
Think about that for a moment.
A country can experience domestic political and fiscal difficulties while many of its largest listed businesses continue selling products and services across the world.
That's an important distinction.
If investors indiscriminately sell French equities because they dislike the political outlook, some fundamentally strong businesses may become cheaper alongside those facing genuine problems.
And that's precisely the sort of disconnect we look for.
Not every falling share price represents an opportunity.
Sometimes shares fall because a business is deteriorating.
But sometimes they fall because sentiment deteriorates faster than the underlying business.
The challenge is distinguishing between the two.
One of the most striking observations in the recent analysis concerned earnings expectations.
While French share prices have been under pressure, analysts' estimates for earnings growth among major French companies over the next 12 months have reportedly been rising.
Read that again.
SHARE PRICES FALLING. EARNINGS EXPECTATIONS RISING.
That's potentially a very interesting combination.
Why?
Because the price investors pay for a company's future earnings matters enormously.
Imagine a business expected to generate €10 of earnings per share.
At €200 per share, investors are paying 20 times those earnings.
If the share price falls to €160 while earnings expectations remain unchanged, the valuation falls to 16 times earnings.
The underlying business hasn't necessarily become less profitable.
But the investor is now paying 20% less for the same forecast earnings.
And if earnings expectations subsequently improve, the potential valuation discrepancy becomes even more interesting.
Of course, forecasts can be wrong.
Analysts can be overly optimistic.
And a cheap-looking business can become cheaper still.
But the underlying principle is straightforward:
When share prices fall faster than earnings expectations, valuations can become increasingly attractive.
This doesn't mean the market must recover tomorrow.
It doesn't mean we've reached the exact bottom.
It means the relationship between price and underlying value may be improving.
And that is something we pay very close attention to at TPP.
There's another statistic worth considering.
France has been massively underperforming for a few years!!!
Now, past underperformance doesn't automatically mean a market is due to outperform.
That would be far too simplistic.
But it does highlight how significantly investor enthusiasm and valuations can diverge between markets.
For years, much of the investment world's attention has been concentrated on US technology stocks and a relatively narrow group of market leaders.
Meanwhile, parts of Europe have struggled to attract the same enthusiasm.
The result?
Some very substantial differences in performance and potentially in valuations.
And markets have a habit of reminding investors that yesterday's winners aren't necessarily tomorrow's winners.
Sometimes the most interesting opportunities emerge in the places everybody else has stopped looking.
We believe parts of Europe deserve a closer look.
Not because they're guaranteed to recover.
But because the combination of negative sentiment, depressed share prices and potentially resilient earnings deserves serious attention.
Every year, as November and December approach, investors start talking about the Santa Claus rally.
And there is some historical basis for the expression.
The traditional definition refers to the final five trading days of December and the first two trading days of January.
According to the Stock Trader's Almanac, the S&P 500 has historically gained approximately 1.3% on average during that seven-session period since 1950.
Interesting?
Certainly.
A reason to throw caution to the wind?
Absolutely not.
Seasonal tendencies are averages, not promises.
There have been plenty of years when markets have failed to deliver the anticipated Christmas present.
And even when the seasonal pattern does materialise, its historical average return is relatively modest.
Our optimism about the remainder of 2026 goes considerably further than a seasonal trading pattern.
We believe the more important story is valuation.
In certain markets, investors have spent months pricing in uncertainty, disappointment and economic risk.
That creates the possibility that a considerable amount of bad news is already reflected in share prices.
And when that happens, markets don't necessarily need fantastic news to recover.
Sometimes they simply need news that is less bad than feared.
Sometimes they need earnings to remain resilient.
Sometimes they need bond markets to stabilise.
And sometimes they need investors to realise that they've become too pessimistic.
This is why we wouldn't be surprised to see European equities stage a recovery before the end of the year.
It might not happen.
But we believe the ingredients for a more constructive period are beginning to emerge.
Across the Atlantic, another potentially significant development is approaching.
The US midterm elections on 3 November 2026.
For investors, midterm elections are interesting for reasons that have relatively little to do with which political party wins.
Historically, markets have often struggled with uncertainty in the run-up to elections.
But the period following midterms has frequently been much more positive.
Research published by RBC Wealth Management, using S&P 500 price returns since 1932, found that:
Fidelity's historical analysis similarly found that the S&P 500 recorded positive price returns in approximately 95% of the 12-month periods following midterm elections since 1938.
Those are striking statistics.
But let's be clear about what they mean.
They describe historical market behaviour across multiple election cycles.
They don't guarantee that 2026 or 2027 will follow the same pattern.
Nevertheless, they suggest that the political calendar can coincide with a meaningful shift in market conditions.
And there's an interesting explanation for why.
It sounds rather counterintuitive.
Most people would assume that investors want politicians to agree, pass legislation and get things done.
But financial markets don't always see it that way.
Markets dislike uncertainty.
They dislike unexpected regulatory changes.
They dislike major tax proposals arriving without warning.
And they dislike not knowing what the rules might look like in six months' time.
Midterm elections can change the balance of power in Congress, potentially making it harder for an administration to pass controversial legislation.
In other words, they can create political gridlock.
And although that might frustrate politicians, investors sometimes welcome a period in which significant legislative changes become less likely.
Less political action can sometimes mean greater policy predictability.
Of course, gridlock isn't automatically positive.
It can complicate budget negotiations, debt-ceiling discussions and responses to economic crises.
But historically, the reduction in election-related uncertainty has often coincided with stronger equity performance.
The important point is that the market's response to an election can be very different from the political narrative surrounding it.
And with the US midterms approaching, this is another factor we believe investors should be watching closely.
Here's where the investment picture becomes particularly interesting.
We have two potentially significant developments occurring within a relatively short period.
In Europe, certain markets have suffered substantial valuation pressure.
In America, investors are approaching a period that has historically been associated with improving equity market performance.
These aren't the same catalysts.
But they could complement one another.
US equities remain enormously influential in determining global investor sentiment.
When confidence improves on Wall Street, that improvement can spread into other developed markets.
European equities may benefit from improved global risk appetite.
Meanwhile, companies that have suffered disproportionately from local political uncertainty could attract renewed interest if their earnings remain resilient.
And if investors begin rotating towards markets and sectors offering more attractive valuations, parts of Europe could potentially benefit.
That's the combination we find interesting.
Not a prediction that every index will rise.
Not a suggestion that political and economic risks have disappeared.
But a credible scenario in which global sentiment improves while some European markets begin closing the gap between their share prices and underlying business fundamentals.
And it wouldn't necessarily take an extraordinary improvement in the economic outlook.
Sometimes markets rally because expectations have become too pessimistic.
This is one of the most important lessons in investing.
Markets are forward-looking.
They don't wait for every economic problem to be resolved before share prices begin recovering.
They don't wait for politicians to agree.
They don't wait for the newspapers to start publishing optimistic headlines.
And they certainly don't send investors a convenient notification announcing that the bottom has arrived.
By the time the economic outlook feels comfortable again, share prices may already have recovered significantly.
That's why attempting to invest only when everything looks positive can be surprisingly expensive.
Consider the alternative.
An investor waits until political uncertainty has disappeared.
They wait until earnings forecasts are unquestionably strong.
They wait until market volatility has subsided.
And they wait until everybody agrees that the outlook is improving.
Wonderful.
Except the market may already have repriced those improvements.
The greatest opportunities are rarely accompanied by the greatest certainty.
That doesn't mean investors should rush into falling markets indiscriminately.
Quite the opposite.
It means opportunities need to be approached with a disciplined investment process, a clear understanding of risk and an appreciation that nobody can consistently identify exact market turning points.
Which brings us to how we approach these environments at TPP.
At TPP, our investment philosophy has never been based on simply buying an index and hoping for the best.
We use a range of investment strategies designed to approach different market conditions in different ways.
Some are structured to participate in rising markets.
Others are designed to be more selective about when market exposure is introduced.
And others allow us to adjust exposure according to prevailing conditions.
Across our portfolios, we combine different strategies according to the investor's risk profile and the opportunities we identify.
Our approach incorporates:
Market timing and entry discipline. We seek to introduce exposure at levels we believe offer attractive potential, while recognising that identifying the exact bottom is rarely possible.
Risk management. We monitor markets and portfolio exposures, adjusting positioning when our analysis suggests conditions have materially changed.
Diversification across strategies. Rather than relying exclusively on a single index or investment style, we can combine complementary approaches.
Ongoing portfolio management. We don't believe investors should have to make every market-timing and allocation decision themselves.
And importantly, we operate through a transparent subscription-based model rather than the traditional percentage-of-assets management fee structure.
But let's address something directly.
Nobody does consistently.
We may establish positions and see markets fall further.
We may introduce exposure during a correction and experience additional short-term volatility.
And sometimes a market takes considerably longer to recover than initially anticipated.
That is the reality of investing.
What matters is whether the original investment rationale remains intact, whether the risks are being managed appropriately and whether the portfolio remains positioned for the opportunities ahead.
A temporary drawdown is uncomfortable.
But a falling market is not automatically evidence that the investment thesis is wrong.
Equally, not every drawdown is temporary, and not every investment ultimately recovers.
That's why discipline matters so much.
Our objective is not to win a competition for predicting tomorrow's market closing price.
Our objective is to build and manage portfolios that can pursue attractive long-term returns while operating within clearly defined risk parameters.
And when markets become volatile, that process becomes particularly important.
Being optimistic is one thing.
Being blindly optimistic is quite another.
We believe investors should always understand what could support a market recovery and what could undermine it.
Over the coming weeks, we'll be watching several developments closely.
If major European companies continue delivering resilient results and earnings expectations hold up, that could strengthen the argument that some share-price declines have been excessive.
French borrowing costs and spreads relative to Germany remain important indicators of investor confidence.
Further instability could place additional pressure on European assets.
Stabilisation, however, could help sentiment.
We will be watching not simply the election results, but how markets respond to the political landscape that emerges.
Changes in inflation expectations and the outlook for monetary policy could materially affect equity valuations.
A recovery supported by improving market breadth and declining volatility would be more encouraging than a rally concentrated in a handful of stocks.
And we won't ignore the risks.
An escalation in geopolitical conflict, renewed inflation pressure, a sharp deterioration in corporate earnings or further sovereign-debt concerns could all undermine the bullish scenario.
Our outlook is constructive, but it is not unconditional.
If the evidence changes, our positioning can change with it.
That's an important part of active investment management.
So where does all this leave us?
With a view that may seem at odds with the prevailing headlines.
We recognise the problems facing France.
We recognise the uncertainty surrounding the global economy.
And we recognise that markets could remain volatile.
But we also believe that parts of the investment landscape are beginning to look more interesting precisely because investors have become so cautious.
Some European equities have been marked down considerably.
Several major French companies remain globally competitive.
Earnings expectations in parts of the market appear more resilient than share-price performance would suggest.
And the approaching US midterms introduce another historically interesting period for equity investors.
Add in the possibility of improving year-end sentiment, and we believe the final quarter of 2026 could prove more constructive than many investors currently expect.
Could we see a meaningful rally before the end of the year?
Absolutely.
Would we be surprised if European equities began recovering some of their recent losses?
Not particularly.
Are we guaranteeing either outcome?
Of course not.
But our experience has taught us that markets can turn when pessimism is widespread and expectations are low.
And when that happens, the recovery can arrive far more quickly than investors expect.
The investors waiting for absolute certainty may find themselves watching much of the initial move from the sidelines.
We would rather concentrate on identifying opportunities, managing risk and maintaining the flexibility to respond as conditions develop.
Because the most important question isn't whether tomorrow's headlines will be positive.
It's whether today's prices adequately reflect tomorrow's possibilities.
And right now, we think there are some very interesting possibilities indeed.
If you're already investing with TPP, much of what we've discussed above will be familiar.
You understand that our approach is built around identifying opportunities, managing exposure and maintaining discipline through changing market conditions.
And you'll know that we don't pretend to predict every short-term market movement.
Sometimes we enter markets and prices move against us before they recover.
Sometimes patience is required.
And sometimes the best investment decisions are the ones that feel least comfortable at the time.
We also appreciate that periods of market weakness can be frustrating, particularly when you've seen portfolio values higher previously.
We don't dismiss that.
But we remain focused on the bigger picture: the quality of the opportunities, the strategies within your portfolio and the risk controls governing those positions.
We are encouraged by some of the valuations emerging across European markets, while remaining alert to the risks that could delay a recovery.
Our objective remains to build on the progress made over time and pursue new portfolio highs, although neither the timing nor the outcome can be guaranteed.
Thank you for your continued confidence in TPP.
We'll continue doing what you expect us to do: monitoring markets, managing your portfolio and making decisions based on our investment process rather than the latest alarming headline.
Let's see how the final weeks of 2026 unfold.
It could be a very interesting Q4.
Perhaps you've been following our market commentary for some time.
Perhaps you've seen our investment strategies, our historical performance information or our approach to risk management.
Perhaps you're frustrated with traditional wealth management charges.
Or perhaps you've simply been waiting for what feels like the right moment to make a change.
Here's something worth considering.
When markets fall, the opportunity set can improve.
That doesn't mean you should rush into investing.
It doesn't mean today's prices are necessarily the lowest we'll see.
And it certainly doesn't mean that attractive historical performance guarantees future results.
But when quality markets and businesses become available at more attractive valuations, disciplined investors have an opportunity to examine whether those prices fit their longer-term objectives.
At TPP, we've spent years developing and refining the strategies we use to approach different market environments.
Our investment process is designed to do more than simply follow an index up and down.
And our subscription-based model means our management charges aren't calculated as a traditional percentage of your portfolio's value.
If you've been considering TPP, this could be an excellent time to understand exactly how we work.
Not because we're promising an imminent rally.
But because we believe it's worth understanding your investment options before opportunities potentially change.
Spend some time with our team and discover:
No pressure. No obligation. Just a straightforward conversation about your investments and whether we can add value.
SCHEDULE YOUR FREE CONSULTATION CALL. CLICK HERE.
Markets won't wait for everyone to feel comfortable.
And while nobody knows exactly what the next few months will bring, we believe there's plenty to be excited about.
France uninvestable? We wouldn't be so sure.
Global equities heading for a difficult end to 2026? Perhaps. But we wouldn't bet on that being the only possible outcome.
At TPP, we're looking beyond the headlines.
And we think the coming months could be fascinating.
TPP
Smarter investing. A different approach.
This article reflects TPP's market outlook as at 22 October 2026 and is provided for general information, not as personal investment advice or a recommendation to buy any particular security or strategy. Views and forecasts may change without notice.
Capital at risk. Investments can fall as well as rise. Past performance is not indicative of future results. Market-timing strategies, diversification and risk management cannot eliminate losses or guarantee investment outcomes. Historical market patterns and analyst earnings forecasts are not reliable predictors of future returns.
Disclaimer: This document is issued by TPP, being provided for information purposes only. This document does not constitute legal, tax, accounting or investment advice, nor should it be relied upon when making investment decisions. This is not a personal recommendation or an offer or invitation to buy or sell any financial instrument. The market conditions and views expressed are as at the date of publication, which may change without notice. Unless otherwise stated, market data has been obtained from sources believed to be reliable. While believed to be accurate, no representation or warranty is given as to its completeness or accuracy.
TPP strategies invest in leveraged financial instruments, including equity index futures. Leverage can magnify both gains and losses, meaning losses may occur more quickly than in unleveraged investments. Investments involve risk and investors may lose some or all of their invested capital. Your capital is at risk.
Past performance is not necessarily a reliable indicator of future performance. The value of investments, and any income from them, can fall as well as rise, and investors may not recover the amount originally invested. Future returns are not guaranteed. Therefore, you should not assume that the future performance of any specific investment or investment strategy will be profitable or equal to the corresponding past performance.
TPP is a trading name of UCapital Asset Management LLP. UCapital Asset Management LLP is authorised and regulated by the Financial Conduct Authority (FCA No. 477155). 80 Coleman Street, London EC2R 5BJ.
Capital is at risk. Investments can fall as well as rise and you may get back less than you invest. TPP strategies may use leverage and short selling, which can magnify losses as well as gains. Past performance is not a reliable indicator of future results. Nothing above constitutes a personal recommendation.
“TPP might just be about to revolutionise investment for the retail market.”
- London Stock Exchange 2020
