Yesterday, the head of France's central bank warned that France is at risk of being "strangled by interest rates."
Today, Marine Le Pen used the same image. She called France's rising interest bill a "noose" strangling the country.
And she's presenting a plan to loosen it.
In a speech today, Le Pen laid out her budget plan for France: a balanced budget before interest costs within 18 months.
France's 10-year yield fell to 4.78% today, and the gap over Germany narrowed to 130 basis points, after hitting its widest since the European debt crisis last week. Italy's gap narrowed to 108.
For years, markets have treated Le Pen as a risk to France. Today, French bonds rallied as she presented a plan for fiscal discipline.
These are the winds of political change building in Europe.
And they're a direct consequence of the doom loop we've been talking about since March.
Energy pushes up inflation. Inflation pushes up rates. Rates push up costs. And those costs push political change.
Meanwhile, the boom loop.
The S&P 500 and Nasdaq closed at record highs today.
And last week, SpaceX launched Google's AI chips into orbit. This is the first real-world test running AI computing infrastructure in space, powered by near-continuous solar energy.
So, the contrast is clear.
In America, the AI buildout is running out of runway on Earth (limited by power).
In Europe, governments are running out of runway in the bond market (limited by credibility).
