The French headed to the polls this past Sunday to choose their next president. Emmanuel Macron, ex-investment banker and ex-minister of economy won first place with 24 percent of the votes. Far-right candidate Marine Le Pen finished in second place with 21 percent voter support, better than she performed in 2012. She and Macron will face off in round 2 on May 7, the winner of which will become the next president of France.

Since the actual election mirrored the pre-election polls fairly closely and didn’t have any major surprises, it’s now believed that Macron should win the runoff with a healthy margin of victory.

No matter who wins, the people of France will have opted for a political outsider even though Macron and Le Pen couldn’t be more different from one another.

The former is a pragmatic centrist with pro-business and pro-Europe views, while the latter’s fiery “France First” platform threatens to pull France out of the euro zone and, perhaps eventually, the European Union.

From the markets’ perspective, Macron is clearly the preferred choice, since Le Pen’s anti-euro, anti-globalization policies could be very economically disruptive. Recall how the Grexit crisis riled markets for months. And France is a much larger economy and more significant member of the EU and euro zone than Greece.

Thus his first-place finish was widely celebrated in global markets this week, which now assumes that he will be the next French president. 

North Korea’s nuclear ambitions, meanwhile, continue to dominate political headlines. We expect China to play the key role in calming the situation. China enjoys having North Korea as a chess piece to counter U.S. influence on the Korean Peninsula, but it does not want actual military conflict so the while the Middle Kingdom doesn’t want to oust Kim, it also wants to keep him contained.

North Korea is expected to conduct its sixth nuclear test soon, as the seemingly unstable and unpredictable Kim Jong Un continues to push the envelope. Given the high stakes involved, chances are cooler heads will eventually prevailed, but with Trump vowing to tighten pressure on the rogue state and Kim reportedly growing increasingly paranoid of an American invasion, the tensions are very real. 
 
Turning our attention to the indicators. Last week we noted that the gold stock indicator had turned bearish. Had we purchased a put option then, we would have a nice gain on it. Unfortunately, with a potentially volatile geopolitical overhanging we decided to wait and missed this opportunity. There will be other opportunities, however.

We note that our subscribers who are comfortable at trading options on their own can act on our indicator signals. You can also email questions@leeb.com for indicator signal updates. Dr. Leeb updates the signals everyday.

The SPDR S&P 500 ETF (SPY) June 220 put remains an open trade as an ongoing hedge against a potentially sharp market pullback.
 

Besides the options, we currently hold open (long) positions in the following stocks: NovaGold (NG), Gabriel Resources (GBRRF), Schlumberger (SLB) and Trilogy Metals (TMQ). In contrast to the option trades, these holdings are meant to be long-term holdings.