Ursula von der Leyen (the European Commission president) and Emmanuel Macron (the president of France) traveled together to pay China’s Xi Jinping a visit. During their meetings, Von der Leyen stressed that Taiwan should be left alone. Macron took a similar line…
“But Macron subsequently spent more than four hours with the Chinese leader, much of it with only translators present, and his tone was far more conciliatory than von der Leyen’s when speaking with journalists.” -Politico
After getting a one-on-one with Xi, Macron then declares that Europe needs to reduce its dependence on the US and US dollar.
Mr Macron said that the “great risk” is that Europe “gets caught up in crises that are not ours, which prevents it from building its strategic autonomy.”
“The paradox would be that, overcome with panic, we believe we are just America’s followers,” he continued. “The question Europeans need to answer … is it in our interest to accelerate [a crisis] on Taiwan? No. The worse thing would be to think that we Europeans must become followers on this topic and take our cue from the U.S. agenda and a Chinese overreaction.”
It seems Xi talked some sense into Macron in their private meeting. I’m wondering what Xi might have told Macron to get him to go against both US and EU policy regarding the dollar, Ukraine, and Taiwan.
Leaving China, Xi snubbed Ursula a good one. I only saw it reported once and I regret not saving the link but apparently Ursula had to go through the commoners immigration channels on her way out while Macron was fast tracked through. Apparently Xi knew which leader to spent extra time with and which one needed to be taken out with the trash.
I hope Ursula has a high quality topical ointment for that serious burn she got in China.
CPI Tomorrow
The CPI gets released tomorrow and traders are positioning for a forecasted rate of 5.5%. If it comes in as expected or lower, expect sectors that are reliant on loose bank lending to be bought.
These sectors would be; info tech, comm services, consumer disc, and financials.
The CME’s FedWatch tool currently shows a 65% chance of a 25 basis point increase by the Fed in May. I expect tomorrow may shift the odds slightly lower but we are a long ways from decision day.
Portfolio Update
Powell has been regularly following through with what he has been saying. His current mantra is that rates will be held “higher for longer”. Looking at the above bank lending chart, I feel I am well positioned for Powell’s higher for longer plan. As credit conditions tighten, those industries less reliant on bank lending will be positioned best for continued success. In addition, any company that is able to utilize funds from outside the US banking system would have an advantage.
Here is my portfolio as of today: