For days, the US equity market has shrugged off every bad trade headline, every weak data-point, every global EM crisis contagion concern, and every signal from other (less-manipulated) markets and soared to record highs, building chips in Trump’s corner to expend in his global trade war.

However, as former fund manager and FX trader Richard Breslow points out, it appears the market is now saying “no mas” as the uglier reality is starting to peak out from behind the curtain.

Via Bloomberg,

Since it’s Friday, I started with the news and then tried to guess what the markets would be up to. Other days the game is played in reverse. This was too easy. Given the upcoming long-weekend in the U.S., the emerging market shambles and the sotto voce move toward perceived safer assets, it’s not a surprise that it looks like nothing is happening today. Never was it more true that traders are quite rightly choosing to let sleeping dogs lie. You have to wonder if they are being a little hasty.

But it is a big mistake to think this in any way implies people are, or should, feel sanguine. Warren Buffett may be adding to his Apple stake. The Austrian representative on the ECB’s Governing Council, Ewald Nowotny, may be calling for rate hikes, regardless of what shape Italy is in. But this all sounds like white noise. You know it’s an off day when JGB futures falling 14 ticks on “BOJ news” grabs headlines in Europe.

All this seeming calm may be appropriate for the day, but needs to be taken with a grain of salt. Markets are confused, not quiet.

At the risk of being repetitive, you just can’t use the U.S. stock market as a risk barometer. It is, just like it did in the third quarter of 2007, receiving the benefits in a very complicated world of being taken as a straightforward, uncomplicated and liquid safe haven. Until it isn’t. Every time this week when I looked at where the S&P 500 was trading, I forced myself to take a peek at EUR/CHF, just as a reality check.

The ultimate safe-haven indicator has now slipped to its lowest since July 2017…

*  *  *

As it’s month-end, it’s time to look at some longer-term charts.

I was struck by how ambiguous they appear vis-a-vis the dollar.

There’s reasonable, even good, arguments to be either bearish or bullish. And nothing screaming from a technical perspective that the market has made its choice and we need to immediately get on board. Frankly, I was a little surprised, but in retrospect this seems entirely appropriate. I’m deathly afraid of the possibility that we will continue to have mini false breaks with no resolution. If we do, it won’t last out the year, but it will be a long slog until we get there.

Sadly, the 10-year Treasury shares many of the same technical characteristics.

There is a slight bias for higher yields, but I must confess little reason for the longs to get out. Like the dollar, this remains a work in progress. But unlike the dollar, I don’t think it can hold this somnolent range for much longer. The question is, how far can it really go? The trick will be not swooning over a few basis point extension one way or the other outside the range without having a solid fundamental reason backing up the excitement.

Gold is again trying to push up against resistance around 1210, but the Bloomberg Commodity Index is lifeless.

This does not bode well for the commodity currencies. Which are also getting no love from Chinese assets. This month-end close for the Shanghai Composite is disappointing, at best.

Monday, or maybe Tuesday, it all starts again. Maybe then all will be revealed. But I suspect it might take a little bit longer.

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