We are back and what a difference a fortnight makes... Many investors are wondering what happened to their portfolio and what to  about it... While most “core” equity markets seesawed, holding their ground for most of the summer despite several dominos falling across EM markets, this situation deteriorated last week with the Dax and Cac40 breaking key bearish technical signals (German car makers printed new lows and French luxury values were shaken a little from their pedestal). Although losses remained contained last week, US stocks started to sputter as well, after serving as a “hedge” against everything else that went wrong during the entire summer... More dispersion materialized among US tech names, with Facebook and the chip sector leading on the downside but with the rest of the tape remaining obnubilated by Amazon and its USD1trn dollar market cap “attraction”. EM in particular was a never-ending bloodbath so far (stocks, bonds and currencies!), brought to its nadir by D. Trump hammering down on Turkey and most recently South Africa aggravating in both cases idiosyncratic domestic problems. By raising the specter again of US tariffs, D. Trump was also instrumental in causing a technical breakdown in European markets as he zeroed in on the German car industry, promising tariffs just weeks after a meeting with JC. Juncker where fears about an escalating trade war had been allayed. What took investors by surprise is that the US President turned down (tweeted away) a European proposal to scrap all tariffs on cars (possibly extending beyond those) which was nothing other than D. Trump’s own proposal. Perhaps he realized why Europeans like European cars (which are the same reasons why Americans like them to) and why his recent behavior will only increase the social pressure on European consumers not to oblige and buy US cars. The engulfing market logic remains that America will be made great again by making everybody else rapidly worse (even as half of the S&P earnings come from abroad), imposing sanctions snowballing into currency crises here, denouncing trade agreements that cause relative stock markets underperformance there , and raising the specter of tariffs everywhere else to the putative sole benefit of the US economic growth (still imposing a considerable consumer tax hikes to the US consumer in the end). According to a BoA survey published a couple of weeks ago, international investors have never been as overweighed US stocks as they are now, at the same time as valuation are historically stretched. This overvaluation is the least of investors’ concerns as suggested by the momentous momentum running behind US momentum shares...until very recently (a shift was attempted into value shares early last week). Notwithstanding the above and as we look around the victims of the otherwise unfolding stealth world equity bear market (most non-US indices now trade below their 50d and 200d ma), the marginal decline in broad US indices last week deserves some notice. Friday’s bearish tech story was a 7% decline for Tesla, on the heels of Elon Musk giving a controversial interview in which he smoked pot (420...). Tesla's Chief accounting officer also quit after one month on the job, followed by Tesla's HR head saying that he would not return from a leave. With pro cyclical corporate tax cuts leading to accelerated share buyback and self-feeding stock prices’ gains, Trump’s popularity outside the US may be fading fast but beyond institutional investors historic overweighed exposure to US stocks, we are hearing that NYC taxi drivers are now bragging again about new all-time highs for US tech stocks which has to be reminded as a consistent contrarian indicator. Elsewhere, precious metals performed as if they were not precious at all again, in particular silver. Gold nonetheless regained some poise over the past week, supported by signs of rising US wage pressure, a fading US stock market momentum and above all, some extreme readings of bearish speculative positioning. Call us stubborn (which we are in a way on the matter of believing gold to be a safe haven of choice), but we still believe that seeing commercials turning net long (and speculative shorts being very short) is supportive and might herald a bottoming out, for gold, silver and demolished gold shares. The gold/silver ratio also hovered around all-time highs amidst continued weakness for industrial metals (which along with a continued flattening of the yield curve spells caution on world growth). The bear case logic for precious metals is that EM countries (Turkey and Russia) would want to sell some gold. We just do not buy this argument (gold is instead returning as a means of payment in trade relations) and are more of the opinion that the precious metals complex is under intense algo selling pressure which will be unwound with a bang. Bitcoin fell over the week end after bitcoin veteran said that it was dependent on marketing and trying to get wider adoption, but "that strategy is getting close to hitting a dead end." The dollar strengthened again on Friday as the strong job number drove expectations that the Fed will keep hiking rates. (despite the blame job of the US President). The COT report showed all longs have been purged in EURUSD. EURCHF remained at its lowest levels since .... near 1.1200 with CHF still smelling a rat somewhere that all is not well in the global economy. Not inconsistently, EURUSD had been supported earlier in the week by good news from Italy which also helped bank shares recouping some of this year’s strong underperformance as the country seems willing to adhere to fiscal responsibility in this month’s budget exercise. Last Friday’s strong job report and moderate labor cost pressure prevented bonds to serve as a safe haven although the EM FX rout continued for the most part. Immediate dangers ahead are geopolitical risks (Syria) and the growing realization of a dysfunctioning US administration after an op-ed revealed the erratic behavior of the President, and his further pushing on trade tariff pedal. Trump said Friday he’s willing to slap tariffs on an additional $267 billion in Chinese goods, on top of duties of $200 billion in imports he is already considering which essentially would cover all US imports from China. ————- This is a delayed and abbreviated version of our premium subscription-based report published ahead of the US and European session every day. For a timely and up to date detailed global markets commentary, a comprehensive suite of market reports with global tactical model portfolios and daily insight, join a free trial to our premium research or contact us. Discounts may apply for both private and professional subscription plans. 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