“Full house” day on the financial markets. While we started the week on Monday morning under the reign of terror of customs duties, we are now ending it on a high note, even though—once again—Amazon’s cloud numbers weren’t enough to satisfy investors. Everything else is “almost” perfect, and nothing seems to be stopping the markets. The DAX is back at an all-time high, the CAC is above 8,000 points again, earnings are generally strong—and if some stocks are down, it’s more psychological than fundamental. And above all, tons of money are pouring into AI!!!

Europe Has Understood

As General De Gaulle once said, “I have understood you!” Well, the European stock markets are no different—except they have understood Trump. As a result, they have received a boost, and nothing seems able to stop them.

Looking back to the start of the week: we were on the verge of a panic attack at the mere thought of Trump slapping unbearable tariffs on us. The anxiety was suffocating. By Tuesday, we felt somewhat relieved to see that if we complied with the American President’s demands, tariffs could actually be renegotiated. The decline in markets stopped, but there was still fear that after Mexico, Canada, and China, Europe might be next on his list.

Then, as the days passed and Trump seemed preoccupied with other matters—such as banning transgender athletes from women’s competitions and, incidentally, from their locker rooms—we started to wonder, “Maybe he has forgotten about Europe.”

Of course, it was difficult to fully believe that. But yesterday, we found a new “buying motivation.” We began to convince ourselves that Trump didn’t actually have bad intentions toward us—he was merely using tariffs as a “threat” to accelerate negotiations on certain issues. So we thought, “Even if he does start attacking Europe with tariffs, it will be resolved in no time because we’ll just negotiate quickly.”

Now, the real challenge is getting the dozens of European MPs in Brussels—who do absolutely nothing all day when they’re actually in Brussels—to reach an agreement. But once that happens, the issue will be settled. In short, we started to believe that tariffs were just political posturing and that a solution would be found anyway.

On top of that, strong earnings reports from SocGen, ArcelorMittal, and Siemens Healthineers fueled optimism, making for an absolutely fantastic day. SocGen surged so dramatically that, for a moment, it almost seemed like Jérôme Kerviel had returned to trade for them. And in France, there was a collective sigh of relief for having a budget.

Magic Assembly

Yes, it’s quite absurd from an outsider’s perspective. The center-right government, led by Bayrou, managed to push through a budget by sheer force. The entire political and economic world agrees that this budget is an absolute disaster and that next year will be even worse, as everything intended for long-term development has been shelved. Yet, everyone is somehow pleased because at least there is a budget.

Still, it’s just a band-aid solution, and the backlash could be massive. When you repaint the facade of a crumbling house, the paint won’t hold the walls together. But never mind. France has a budget, SocGen is soaring, and nothing seems to be able to stop the CAC 40, which is just a hair away from its all-time highs. Meanwhile, Bayrou even managed to erase the dissolution of the CAC 40 tables.

In the U.S., investors hesitated on which direction to take. Many stocks that had reported earnings the previous day were struggling, and the big question was whether Amazon could save the market by the end of the session.

Yet, as the day progressed, the indices gravitated toward their usual favorite direction: upward. Once again, AI giants led the charge, and everyone reassured themselves that Google would still pour mountains of cash into AI—just like Microsoft and Meta—which was great news for Nvidia, which continued to rebound, and Palantir, which gained another 10%.

Palantir, by the way, is at valuation levels that are downright scary (it’s currently trading at 65 times its revenue—I’ll just leave that here, but it’s huge). However, that didn’t seem to concern anyone.

By the end of the day, Ford was still declining, the Dow Jones flirted with all-time highs, and Nikola—the former electric vehicle darling—filed for bankruptcy. Meanwhile, traders turned their focus to the upcoming Non-Farm Payrolls (NFP) report, due this afternoon.

For the record, the Jobless Claims report came in stronger than expected, but again, that wasn’t the day’s concern. The market was simply looking for a reason to rise.

NFPs: A No-Brainer?

Speaking of Non-Farm Payrolls (NFP)—expected at 169,000—everyone seems fairly confident. The big question is: What will be considered a “good” number this afternoon?

The only consensus so far is that the unemployment rate should stay at 4.1%. But when it comes to job creation, things get tricky. If the number comes in higher than expected, that means the economy is strong, which could be a reason not to cut interest rates. In other words, too much good news could be bad news for rate-cut expectations from the Federal Reserve.

On the flip side, if job creation falls below expectations, it would signal economic weakness—but markets could spin it positively, hoping that the White House’s “savior” will fix everything in the coming months. In short, a bad jobs report might actually be better for markets.

One thing is certain: the interpretation of today’s NFP data will be highly psychological. And that’s what traders will be focusing on.

For now, the takeaway is simple: this market refuses to fall, and as long as there’s an excuse to stay optimistic, we’ll keep climbing—until we can’t anymore.”