1. Today is all about Europe.

Prime Minister Francois Bayrou’s forced a budget through France’s divided parliament and succeeded in avoiding a far-left attempt to topple his government.

Also, the ECB is expected to lower interest rates and drop a big clue on how far it will go.

Let’s see if European stocks can continue to outperform the US…which is already a big surprise.

2. Made in America?

Would a Birkin handbag be less appealing if it was made in America, rather than in France or Italy?

According to consulting firm Bain, around 55% of global luxury goods are produced in Italy, mainly by independent factories that take on work for big brands.

Moving some manufacturing to the US would allow designer brands to avoid tariffs altogether. Luxury companies might even save money in the long term since energy is much cheaper in the U.S. than in Europe.

Manufacturing outside Europe hasn’t harmed LVMH-owned Louis Vuitton either. The brand already has three large factories in America that produce handbags for the local market. These purses carry a “made in U.S.A. of imported materials” label and shoppers don’t seem to mind.

Source: WSJ

3. “Buying defensive stocks is the best tactic for a Trump trade war.”

In the past three weeks, defensive companies in the S&P 500 Index have gained 2.4%, compared with a 1.2% loss in their cyclical peers.

“Market participants typically favor these more defensive areas of the market when uncertainty is elevated, and potential tariffs bring plenty of uncertainty,” said Bloomberg Intelligence analyst Christopher Cain.

Veteran strategist Jim Paulsen says risks clouding the outlook for financial markets go far beyond the threat of tariffs by Trump, with an economic slowdown that is already underway expected to weigh on stocks. Still, he says, investors should avoid flocking to cash and use this time instead to reallocate their portfolios with a more defensive tilt.

Paulsen recommends trimming winners within segments like technology or recently bid-up financials, and instead moving to segments like pharmaceuticals, consumer staples, and S&P 500 dividend aristocrats.

4. UK stocks are seen as a relative haven from the tariff turmoil threatening Europe and other markets.

For Société Generale strategists, UK equities are appealing because not only are they ultra cheap, they are also relatively defensive.

“FTSE 100 has a low beta to world trade given its defensive characteristics and the UK is a services-oriented economy.”

“Furthermore, in his most recent comments President Trump suggested that the UK — which does not have a trade surplus — would be less likely a target of US tariffs.”

Meanwhile, the UK stock market trades at a massive 45% discount to US peers based on forward P/E ratios.

“The London benchmark is also cheaper than euro area stocks, with valuations well below historical averages. While that hasn’t helped the FTSE 100 much in recent years, it might be an asset in the event of broader turmoil in financial markets.”

5. Norway’s sovereign wealth fund is the biggest in the world.

It owns 1.5% of all listed stocks globally, making it the world’s largest single investor. Norway’s wealth fund is now worth $319,900 per citizen.

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