Risk assets are exhibiting an exceptional degree of resilience and equity markets are clearly saying that President Trump is good for corporate profits.
Markets seem concerned that a Marine Le-Pen presidency could lead to France leaving the EU. That would be good for gold and bad for French and peripheral debt and Eurozone equities. However, we are more worried about such an outcome in Italy and bookmakers seem to agree.
Doubts are increasing about the US policy mix, and the hopes of much fiscal stimulus and little protectionism that have buoyed markets since the election may not be how things eventually work out. Based on the new administration’s first two weeks, caution looks warranted.