Podcast: Play in new window | Play in new window (Duration: 13:15 — 7.6MB)

DOW + 216 = 20,763
SPX + 25 = 2374
NAS + 73 = 5983
RUT + 18 = 1397
10 Y + .03 = 2.27%
OIL + .06 = 49.29
GOLD – 7.90 = 1277.00

Last Friday we spent some extra time talking about the French election; thinking it might be a significant event for the markets. Results in France’s election on Sunday saw centrist Emmanuel Macron and far-right nationalist Marine Le Pen emerge as the top two candidates for a run-off in two weeks’ time.

Early polling shows that Macron is expected to win by a wide margin, with one poll showing the 39-year-old is expected to get 62% of the vote. Le Pen is considered a risk to markets for a variety of reasons, including her vow to hold a referendum on France leaving the EU were she to win election as president. That is early polling and anything can happen in the next couple of weeks, and even if Macron wins, he will need to forge a parliamentary majority.

But for now, nervous investors and traders flipped the switch from safe haven bets to “risk on”. European shares surged to a 17-month high. The euro scaled back gains after its best open on record. The major Wall Street indexes posted their best one-day advance since March 1. The Nasdaq Composite closed at a new record high.

This should be a very interesting week. President Trump tweeted on Saturday that he plans to announce a “big” tax reform and reduction plan on April 26. Trump has ordered White House aides to accelerate efforts to draft a tax plan slashing the corporate rate to 15% and prioritizing cuts in tax rates over an attempt to not increase the deficit, according to Marketwatch.

Treasury Secretary Steven Mnuchin and National Economic Council Director Gary Cohn are scheduled to meet Tuesday to discuss Trump’s tax proposals with Senate Majority Leader Mitch McConnell, House Speaker Paul Ryan, Senate Finance Chairman Orrin Hatch and House Ways and Means Chairman Kevin Brady of Texas. The meeting comes in advance of a Wednesday announcement by Trump; although you might think these leaders should already know the plan.

Mick Mulvaney, the director of the Office of Management and Budget, has said it is unlikely the administration will release a full plan until June at the earliest. So, it sounds like the Wednesday announcement might be long on concept and short on detail.

The Trump administration is preparing to brief all 100 senators Wednesday on the situation in North Korea. Today, Trump said the UN Security Council must be prepared to impose new sanctions on North Korea as concerns mount that it may test a sixth nuclear bomb as early as tomorrow, which marks the 85^th anniversary of the foundation of North Korea’s army.

US officials told Reuters tougher sanctions under consideration include an oil embargo, banning North Korea’s airline, intercepting cargo ships and punishing Chinese banks and other companies doing business with North Korea.

The State Department said Secretary of State Rex Tillerson would chair a special ministerial meeting of the Security Council on North Korea on Friday that would give members the opportunity to discuss ways to maximize the impact of existing sanctions and “show their resolve to respond to further provocations with appropriate new measures”. Two Japanese destroyers have joined the U.S. carrier group for exercises in the western Pacific, and South Korea said it was in talks about holding joint naval exercises.

Also on Wednesday, Federal Communications Commission Chairman Ajit Pai is expected to unveil his plan to replace the agency’s hotly contested net neutrality rules.

Meanwhile, a government shutdown is possible on April 29 if Congress doesn’t approve a spending bill to fund the government. Trump’s biggest demand is a Democratic deal-breaker: money for his long-promised border wall with Mexico. Democrats hope he’ll blink to avoid partial shutdown which would start on Saturday, Trump’s 100th day in office.

Trump insists that Mexico will pay for the wall eventually, later, in some form. Until then, he wants American taxpayers to foot the bill. There is an out for both sides – a short-term spending plan that would provide another week or so for negotiations after the deadline early Saturday.

US investors are also gearing up for the busiest earnings week of the earnings reporting season, with over 190 S&P 500 members. Earnings are coming in better than expected. Of the 100 S&P 500 companies that have reported results so far, 77 percent have beaten profit expectations, according to Thomson Reuters I/B/E/S.

This has helped lift profit growth estimates to 11 percent from 10 percent forecast at the start of the earnings season. Alphabet (GOOG), the parent company for Google (GOOGL), just passed $600 billion in market capitalization – they report earnings Thursday. Also on the earnings calendar this week: Microsoft (MSFT), Amazon (AMZN), Twitter (TWTR), Intel (INTC), Credit Suisse (CS), Barclays (BCS), Daimler (DDAIF) and Total (TOT).