The markets remain on fire after bolting out of the gate buoyed by the outcome of the French election and polls suggesting an easy victory for Macron in a couple of weeks.  Of course, we know polls can be wrong, but the market is looking specifically at two things:

• The size of Macron’s lead (24 points versus 2-3 points for Clinton and some polls +1 for Remain vs Leave EU) is substantial with only two weeks to go.
• The fact a terror attack on the eve of the election didn't move the needle - Paris overwhelmingly voted for Macron.

Still, the outcome of the next round of voting isn’t a slam dunk considering Le Pen outperformed Macron in the two youngest age groups, and he only won outright with French citizens 65 years old or older.  He got the immediate backing of Fillon, and that might bring some organization.  The wildcard however is the communist candidate, who could throw his support behind Le Pen, even though he campaigned against her father years ago.

That focus on younger voters is underscored by the persistently high youth unemployment in France.   I’m not betting against an upset on May 7, but I get there is still a chance populism wins.

Overall unemployment remains high as well and could help the nationalist candidate with promises of government assistance while limiting immigration.

For now, the market is breathing sigh of relief, and that's reflected in the global winners, which includes S& P Financials +2.4%, more than 100% more than any other sector lead by global bankers:

• MS +4.45
• JPM +3.5%
• GS +3.3%

Additional Wildcard Le Pen Working Class Edge

• Le Pen 37%
• Macron 16%

I read an article from a French left-wing newspaper critical of Macron for his “early celebration.”

Mr Macron, 39, was denounced as arrogant by supporters of Marine Le Pen, 48, his far-right adversary, for inviting supporters, including a host of Parisian celebrities, to a glitzy restaurant after coming top in the first round of the election.

Mr Macron also raised eyebrows for appearing with Brigitte Trogneux, his 64-year-old wife, on stage at a victory rally that was more reminiscent of JF Kennedy than General Charles de Gaulle.

For now, the rally continues and there are reason beyond politics including the huge earnings report from Illinois Tool Works (ITW) this morning, which Hotline subscribers should already be long.  If you are not a subscriber, contact your representative or email Info@wstreet.com.