DJ Euro Stoxx 50

Today's sudden 'Minsky Moment' in markets has pushed US equity risk perceptions to their highest relative to Europe since August 2015, back to old 'norms'.

As Bloomberg notes, U.S. politics are taking center stage as risks recede in Europe following the French presidential election. With Donald Trump facing the deepest crisis of his presidency, the CBOE Volatility Index surged on Wednesday, while Europe’s VStoxx Index rose less than 5 percent.

Equity strategists are cooling on the prospects for further gains in European stocks just as investors poured a record amount of money into the region’s equity funds...

After a French election victory for centrist Emmanuel Macron and analysts suggesting that optimism over better profits is largely priced in, forecasters now see fewer triggers for the rally to continue in 2017.

Risk is definitely on this morning as European shares soar, led by French stocks and a new record high in Germany's Dax, after a "French relief rally" in which the first round of the country’s presidential elections prompted investors to bet that establishment candidate Emmanuel Macron will win a runoff vote next month, and who is seen as a 61% to 39% favorite to defeat Le Pen according to the latest just released Opinionway poll.

For those who may have missed yesterday's events, here is a quick recap from DB:

The timing of Bloomberg's Richard Breslow left something to be desired: just hours after he urged traders not to assume that "each event will end badly", the market quickly did just that, breaking virtually every "reflation support line" and then as a cherry on top, Donald Trump flipped on half a year of market narratives, and may have put a final nail in the reflation trade coffin, sending the S&P below the 50DMA for the first time since the election.

With little more than two weeks to go before the first round of French elections, expectations for sizable fluctuations in European markets are growing.

As Bloomberg reports, the VStoxx Index, which measures volatility bets based on options on the Euro Stoxx 50 Index, has rebounded from suppressed levels and is heading for a third consecutive weekly advance.

That’s its longest rising streak since before the U.K. referendum on European Union membership last year.