I’m starting to look at Europe again. Long time readers know we killed it with the European Aerospace and Defense theme…..

In my mind it was the most obvious Trump trade. I’ve been noticing the outperformance of stocks around the world, and for the most part I’m not interested, the best companies are still in the US. But the trend seems to be towards digital sovereignty in Europe.
Add in the AI arms race with China and I’m starting to smell opportunity…….

International and emerging market equities have been outperforming United States — and most investors are still explaining it with the usual lazy narratives: “valuations,” “mean reversion,” “the dollar.” Those matter… but they’re not the main event.

The main event is this: the world is building optionality away from U.S. policy and platform dependence. And once you see it, you can’t unsee it — because it’s showing up in procurement decisions, supply chains, defense budgets, and capital flows.

You’ve already been on the right side of it with European aerospace & defense. But the next leg isn’t just “more tanks.” It’s digital sovereignty — and it’s quietly becoming the civilian version of rearmament.

And yes: the “China channel” is reopening too — not as a kumbaya pivot, but as a cold-blooded hedge in a world where everyone wants a second door.

A weaker dollar tends to be constructive for emerging markets (looser global financial conditions, easier funding, better commodity translation, improving risk appetite). That’s the classic playbook — and it’s still valid.

But the bigger point is why the dollar is weak:
capital is demanding diversification and optionality. Not a full “abandon the U.S.” move — more like “I want exposure… but I want an escape hatch.”

The market is slowly waking up to something that central banks and policymakers have been talking about more explicitly: when trade barriers rise, trade doesn’t disappear — it reroutes. That means relative winners and losers shift across European Union, EM Asia, LatAm, and selected “connectors.”

Translation for investors:
This isn’t a one-ticker story. It’s a geography + supply-chain architecture story.

You’ve been in European aerospace/defense. Stay there — the structural bid is real. But now Europe is adding a second pillar:

In plain English, digital sovereignty means:

That’s not a theoretical debate anymore.

Recent reporting highlighted France pushing government workers away from U.S. collaboration tools toward state-controlled alternatives as part of a broader sovereignty push.

And Schleswig-Holstein has been moving public-sector workflows away from Microsoft-dependent infrastructure toward open-source / European-controlled solutions.

This is the pattern:

It’s messy. It’s inconvenient. It won’t be “all at once.”
But it’s investable — because spending follows fear, and this fear is becoming policy.

If defense is Europe’s “hard power” rebuild, EuroStack-style thinking is the “soft power” rebuild: a push toward a European-controlled tech stack across compute, cloud, security, and apps.

Two important nuances (this is where people get faked out):

This isn’t sexy. It’s not an app store story.
It’s a multi-year plumbing capex cycle — and those are the cycles that tend to compound quietly.

When countries feel the U.S. is unpredictable, they don’t necessarily “choose China.”
They choose optionality.

That shows up in:

But the investable takeaway is not “buy China.” It’s: pick the lane.

The lanes that tend to benefit in a selective reset world:

And the lanes that remain structurally fragile:

(And yes — the trade rerouting point matters here too.)

Below are theme-level “winners/losers” with clear, specific tickers as examples (not recommendations).

These remain direct beneficiaries of the “rearm Europe” and allied procurement cycle:

Why they win: Europe is still rebuilding deterrence, munitions capacity, ISR, and air/space capabilities — and those programs don’t flip off in one quarter.

Examples of “sovereignty-adjacent” beneficiaries:

Why they win: migrations are hard, procurement becomes political, and “good enough + sovereign” can beat “best-in-class + foreign-controlled” in regulated lanes. The existence of government pushes to move off U.S.-controlled tools is the tell.

Why they win: when sovereignty becomes policy, redundancy becomes procurement.

Examples (again: lane matters):

Why they win: if the world reopens the China channel selectively, scale platforms and industrial champions are the first places global capital looks — but it remains a “position sizing + policy risk” trade, not a marriage.

This isn’t “the end” of U.S. tech in Europe — but it is a real headwind where procurement becomes sovereignty policy:

Why they lose: not because the products stopped working — because dependency became the risk.

Anything premised on Europe instantly replacing hyperscalers across the whole economy is likely to disappoint.

Why they lose: the world doesn’t pivot on a press release — it pivots where procurement, regulation, and security requirements force the change.

The fragile lane:

Why they lose: in a rerouted trade world, volatility doesn’t vanish — it relocates.

Europe is building two shields:

And EM/China outperformance is less about “risk-on” and more about capital seeking non-U.S. pathways — often helped by a weaker dollar backdrop.

A ton of news on Friday—we had the crash in precious metals and Bitcoin, Warsh (see below) and then this…..

Jensen walked it back, but this could be massive news.

The market is moving from “AI spend = automatically good” to “AI spend is only good if it shows up in growth and/or pricing power.” That’s why Meta Platforms can rally on massive 2026 capex (because ads are re-accelerating), while Microsoft can sell off on a small Azure growth disappointment paired with heavy spend.

At the same time, the “real economy” constraints (power, cleanrooms, memory supply, fiber, storage) are becoming the dominant drivers across semis and infrastructure.

Now onto Warsh…..

Noise: I’m hearing a lot of overconfident “one-headline, one-regime-change” takes: that Kevin Warsh is basically Paul Volcker reincarnated so the “debasement trade” is dead and gold/silver are finished, or the opposite—he’s a guaranteed puppet for Donald Trump so rate cuts are inevitable and the metals crash is a one-day fake-out. Same with the metal tape: people are narrating Friday’s move as if it’s a clean fundamentals verdict, when a violent, air-pocket unwind in crowded trades can look “fundamental” in hindsight even when it’s mostly positioning, liquidity, and headline reflex.

News & takeaways: The actual news is straightforward: Trump has nominated Warsh to succeed Jerome Powell, but the policy reality right now is still the Federal Reserve on pause—holding rates at 3.50%–3.75% while explicitly upgrading growth language to “solid pace,” noting labor-market stabilization, and keeping inflation flagged as “somewhat elevated.” Real-time growth trackers are consistent with “no urgency to cut”: the Federal Reserve Bank of Dallas WEI is 2.49% and the Federal Reserve Bank of New York staff nowcast is ~2.7%. Markets treated Warsh’s nomination as a near-term reduction in “political-dovish” tail risk, which helped spark a dollar squeeze and a brutal unwind in precious metals—silver -31% to $78.29 and gold futures -11% to $4,713.90, the worst day since 1980 per the report (The CME hiked margin which probably had way more to do with this move than Warsh). The takeaway for “news vs. noise” is: don’t trade your entire macro worldview off the first reaction—this looks like a positioning reset around a policy-perception shift; what matters next is whether the Fed’s “hold” becomes a sustained stance (inflation data), whether the dollar strength persists, and how Warsh threads credibility vs. growth politics once the nomination process turns into actual governance.

Today’s stock is Freeport McMoRan (FCX)…..

I still love the natural resources/metals trade. It’s gone parabolic so there could be some more downside here, but much prefer buying dips than buying highs.

Freeport-McMoRan (FCX) — it’s a high‑beta copper lever, so I treat it like a read‑through on copper + macro risk sentiment; after Friday’s sharp pullback to about $60.23 (roughly ‑7.5% on the day) with a $58.70–$63.19 range and heavy volume, the key for me is whether it can hold the high‑$50s and then reclaim the low‑$60s with follow‑through—if it does, it’s a clean “bounce setup” watch, and if it loses the day’s lows decisively, I’d rather wait for a steadier base before getting interested again.

Been making the rounds on YouTube lately as our unique approach to option income is starting to get noticed……

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