The semiconductor leadership cracked exactly where our Beta-Instability call pointed (Daily Pulse 02 June), the wave we flagged in Section 11 fired on schedule, and the damage stayed inside tech. A (probably more extended) correction, not the end of the cycle, in our opinion.

In This Edition

(1) This Week’s Action (2) Overview: The Global Market Map (3) The State (4) The State Continued: Regions & Sectors (5) What May Lie Ahead: Macro Setup (6) What May Lie Ahead: Technical Setup (7) The ETF Portfolio: What We Did (8) The ETF Portfolio: What We Plan To Do (9) Knowledge Corner — Beta Instability (10) Upcoming Transactions: Be Informed (11) What May Go Wrong: Risk & Change Triggers (12) Final Words

(1) This Week’s Action

Last Saturday, the tape was the mirror image of this one: risk-on broadened cleanly, Asian tech led the world, and volatility eased. This week it reversed — hard, fast, and from the inside. Friday delivered a tech-led risk-off that ran through every region, but the wreckage was concentrated exactly where the leadership had been: in semiconductors and Asian tech.

VT, total world, fell −3.07% to 153.68 after tagging a fresh all-time high near 158.54 days earlier. VEU, the ex-US anchor, dropped −3.76% to 81.13 — straight off the 84.30 resistance it had been pressing against. But the index moves understate the damage at the leadership level: global technology (IXN) −7.32%, the Nasdaq-100 tech sleeve (QTEC) −7.46%, QQQ −4.80%, and at the very front of the decline, Korea (EWY) −14.1% on record volume and Taiwan (EWT) −7.3% — the two markets that ran +110% and +60% on the year, now cracking first.

What makes the week diagnostic is the signature. A move this sharp usually drags a haven bid with it. This time there was none: long Treasuries did not rally (TLT −0.51%, holding 85), gold fell −3.65%, silver −8.08%, copper miners −10.62%, bitcoin −5.22% — and the only thing that caught a bid was the dollar (UUP +0.65%). Everything sold together.

That is the fingerprint of a positioning unwind and de-risking, not a flight to quality. The fear gauge confirmed it: the VIX spiked roughly +40% to 21.51, back above 20 for the first time in months.

The catalyst was a stack, not a single shock. Weaknesses in some semi sectors in Asia surfaced first. Broadcom’s earnings on Thursday lit the semiconductor fuse; Friday’s strong May payrolls pushed long yields back up (20Y/30Y above 5%) on renewed inflation worry, and an AI-skeptic research note plus a large Meta secondary offering gave the megacap-tech complex its excuse to de-gross.

The three-line read: the soldiers fell first, the generals followed, and the damage stayed inside tech. Section 11 covers why that distinction is the whole story.

(2) Overview: The Global Market Map

One level beneath the country map, the global-sector board carries the inverse of last week’s risk-on signature. Where growth and cyclicals led seven days ago, the board now sorts cleanly the other way: tech and materials at the bottom, defensives at the top.

Global technology (IXN) −7.32% anchored the decline by a wide margin, with materials (MXI −3.96%), energy (IXC −2.08%, with crude soft), telecom (IXP −1.89%), consumer discretionary (RXI −1.70%), and industrials (EXI −1.63%) following. Global financials held up best of the cyclicals at just −0.96%.

The tell sits at the top of the board: the classic defensives went green. Consumer staples (KXI +1.19%), healthcare (IXJ +0.58%), utilities (JXI +0.48%, and global REITs (REET +0.22%) all gained on a day the world fell 3%. When defensives bid while growth bleeds, the market is repricing risk appetite — not pricing a recession. And crucially, the red is not a breadth collapse: it is concentrated in the corners that had run furthest.

Cross Asset

Across assets, the message rhymes with the sectors and with Section 1: no haven bid anywhere except the dollar. Long bonds slipped rather than rallied (TLT 85.06, −0.51%), gold and silver were sold (GLD −3.65%, SLV −8.08%), copper miners were crushed (COPX −10.62%), bitcoin fell (IBIT −5.22%), and crude eased (USO −2.72%). The dollar (UUP +0.65%) was the lone winner. A day where stocks, bonds, gold, and crypto all fall together is the mechanical signature of de-grossing.

Tech Thematics

Inside tech, the rotation tells the forward story. Semiconductors took the worst of it — and the second-tier worst of all: equal-weight semis XSD −11.27%, fabless SMHX −10.44%, cap-weight SMH −9.22%. The high-beta AI/robotics/quantum complex followed (AIQ −8.15%, WTAI −8.83%, QTUM −8.23%, BOTZ −5.24%), as did digital assets (DAPP −9.44%, ARKK −6.97%).

But the software complex fell markedly less: IGV (software) −4.21%, CIBR (cyber) −4.41%, CLOU (cloud) −3.71%, FDN (internet) −3.24%. That is the diagnosis. The part of tech that led Wave 3 — semis — is taking the deepest cut, while the laggard-turning-leader from last week — software — is correcting least. That asymmetry is the early shape of the next-leg rotation, and it is exactly what the Beta-Instability toolbox is built to catch (Section 9).

(3) The State

Pull the threads together, and the roadmap from last week doesn’t break — it advances to its next chapter.

The Thesis

Last Saturday, we wrote that VEU sat in the fifth and final sub-wave of the larger Wave ③, pressing toward an early-summer top, with a Wave ④ correction due after.

This week, VEU reversed precisely at the 84.30 resistance we named as the overhead band — and the wave structure now reads as sub-wave 5 of the larger Wave ③ complete.

With ③ most likely finished, the market is entering the larger-degree Wave ④.

By the rule of alternation, a Wave ④ that follows the sharp, quick Wave ② should be the opposite in character: complex, sideways, and drawn out — likely several months, not a single fast flush. The near-term ambiguity worth holding lightly: a bounce that attempts new highs from here could be either a final fifth-of-③ push that completes the larger third, or already the Wave B of ④ that fails to make new highs. Which one it is, the price will tell — we wait rather than predict.

What does not change is the larger structure. VT remains far above its rising trendline near 140; VEU still holds its channel off the spring low. The bull market is interrupted, not over — and the structure is only falsified on a decisive channel break (Section 11).

The Five-Force Confirmation

Breadth. Contained, not broken. The selling was concentrated in tech. Outside it, the tape barely moved: S&P ex-tech (SPXT) −0.47%, Nasdaq ex-tech (QQXT) −0.59%, equal-weight S&P (RSP) −1.42%, value (VTV) −1.36%. This was a leadership flush, not a market-wide breakdown.

Leadership. Broken — by design of the count. The Wave-3 generals led down: XSD −11.3%, SMH −9.2%, Korea −14.1%, Taiwan −7.3%, IXN −7.3%. Leadership rolling over is what tops a third wave.

Volatility. Spiked. VIX +~40% to 21.51, back above 20. The dormant fear gauge we flagged last week as “asleep” woke up violently — the resolution of the very condition in Trigger 3.

Dollar. Headwind. From effectively flat last week to +0.65% (UUP) — a modest but real reversal that adds pressure to ex-US and EM leadership.

Rotation. Within tech, semis → software. The move was out of semis, not out of tech wholesale: software, cyber, and cloud fell roughly half as much as semis. The next leadership candidate is correcting least.

The VT/SPY Ratio

International fell with the US rather than ahead of it this week: VT −3.07% against SPY −2.58%, with the damage skewed to the tech-heavy blocks (QQQ −4.80%) and to Asian tech outright.

The co-leadership regime is intact; the lead simply rotated to the downside this week.

(4) The State Continued: Regions & Sectors

Asia led the world lower — the same names that led it higher. Korea (EWY −14.1%, ~49m shares) and Taiwan (EWT −7.3%) took the deepest regional cuts as the semiconductor and AI supply chain upstream of them — TSMC, Samsung, SK Hynix — repriced lower in real time. Japan (EWJ −3.62%) and Indonesia (EIDO -6.34 %) followed.

Last week, these were the leaders we explicitly declined to chase; this week, that discipline is the difference between a haircut and a wound.

Europe was a relative haven. The continent’s laggard status a week ago became protection: the UK (EWU −1.07%), Switzerland (EWL −1.37%), Spain (EWP −1.23%), France (EWQ −2.01%), and Germany (EWG −2.23%) all fell less than the world, with the Netherlands (EWN −3.81%) the exception on its tech tilt. With no AI-leadership beta to give back, Europe had less to lose.

The China orbit and commodity-currency complex fell broadly (FXI −2.03%, ASHR −3.06%, EWH −3.11%, Brazil EWZ −2.21%, Australia EWA −3.37%), pressured by the firmer dollar — but without panic. India (INDA −1.42%) held up better than the majors.

(5) What May Lie Ahead: Macro Setup

The Test of the Transitory Thesis

The selloff’s trigger was, paradoxically, a sign of strength: a strong May payrolls report. Robust jobs pushed long yields back up (20Y/30Y above 5%) on renewed inflation worry — and that yield blip, layered onto an AI-skeptic note and a Meta secondary, is what turned a strong-economy print into a tech-positioning flush.

This is the crux of the house view, and it is unchanged: the inflation impulse is transitory, not structural. Unit-cost inflation is running near 0.5% on the back of strong US productivity, and crude is falling, not rising — disinflationary, not the opposite. The one scenario that would convert “interruption” into “end” is a durable, war-driven oil spike that makes the cost pressure structural. Absent that, a yield wobble on strong jobs is a growth-driven repricing that the bull market can absorb.

And the test is immediate. US CPI lands next week. A cool CPI validates the transitory read and the rotation thesis; a hot one is the first real evidence the bears need. The whole roadmap routes through that print.

The Low-Trust Rally Just Got Its Stress Test

Last week, the missing ingredient was froth — no euphoria, no FOMO. That cuts both ways now: a rally that was never crowded with speculative longs has less to unwind, which is why the damage stayed contained outside tech. The VIX spike to 21.51 is a repricing of risk, not yet a panic.

The Bond Market’s Read

Long Treasuries slipped rather than cracked (TLT 85.06, −0.51%) and held well above the 83 support line that defines the bull case. So far, the bond market is signaling a growth-driven yield blip, not a regime change in inflation. The clean warning remains a weekly close below 83 (Section 11).

Central Bank Pulse

Fed: A new chair angle. An FOMC decision lands next week alongside CPI — the first policy signal into a tape that has just repriced. The market still prices a steady path; the strong payrolls argue against any near-term easing. Ed Yardeni believes a rate rise will come by July 2026.

ECB: Financial conditions on the continent remain stuck between low growth and sticky inflation. A rise in rates may come by July as well.

Seasonality — VEU Monthly Pattern

The seasonal map still points the same way: constructive into early summer, then the August–September soft patch, amplified this cycle by the midterm-election year. That maps onto the count — a Wave ④ correction unfolding across the seasonally weak window before a Wave ⑤ into year-end.

The standing caveat holds: seasonality is a tendency, and facts can override it. This week’s break may pull the calendar’s weak phase forward.

(6) What May Lie Ahead: Technical Setup

The technical story of the week is the rotation inside tech — and it is the bridge to the next leg.

Semis Break, Software Bends

The semiconductor complex didn’t just fall; it led the fall, and the second tier led the first: XSD −11.27% versus SMH −9.22%, with fabless (SMHX −10.44%) just as weak. This is the downside confirmation of Tuesday’s Daily Pulse call — equal-weight semis had already stopped participating on up days; on Friday, they fell hardest on the down day. Both sides of the beta now agree: semiconductor leadership has rolled.

Software, by contrast, only bent: IGV −4.21%, with cyber and cloud similar. A leadership group tops out by breaking; a successor group corrects more shallowly and holds the structure. That asymmetry — semis breaking while software bends — is the technical setup for a possible Semis → Software/Agentic rotation on the next leg up. We will not guess it; we will measure it (Section 9).

The Technical Reading on VT and VEU

VT printed a sharp reversal candle off the all-time high near 158.54, closing at 153.68, with the slow stochastic rolling over from a deeply overbought 90+ — a textbook mean-reversion from an extreme, with the rising trendline near 140 untouched and far below.

VEU reversed exactly at 84.30 — the upper edge of the 85–88 band flagged last week — completing the fifth sub-wave of the larger Wave ③. The structure stays bullish while VEU holds its rising channel off the spring low. The downside guardrails are that channel and the horizontal support beneath it; a decisive channel break would be the signal that Wave ④ is underway in earnest rather than as a first warning.

Alignment Check

═══ Risk-Off — Internal Trigger Fired, Trend Intact ═══

Leadership and volatility have flipped against the trend; breadth and the larger structure have not. The posture: respect that the third wave has likely topped, expect a complex multi-month Wave ④, and let the falsification levels in Section 11 — not the headlines — decide whether this is a correction or a cycle’s end.

(7) The ETF Portfolio: What We Did

No transactions this week — the Global ETF sleeve held its positions through the reversal. It expresses the non-US side of the Closelook Reference framework through liquid ETFs and is coarse by design: it buys regions and themes rather than individual franchises, because an ETF sleeve’s job is to express regime and rotation calls, not to pick names.

The reference portfolio (skin in the game; methodology and constituents are public) is benchmarked against the FTSE All-World ex-US and has been running since August 2024.

(8) The ETF Portfolio: What We Plan To Do

Last week, we wrote that the one setup that would prompt action was a major dip — and that, on weakness, we would add to software and agentic-winner exposure — the part of the tech complex still early in its recovery — rather than chase the extended leaders. That setup is now live.

The discipline is unchanged, and the week just validated it: we do not buy the crashed semis or Semisorea/Taiwan leaders that ran +60% to +110% and are only now rolling over, adding into a leadership group that is topping, buying the wrong end. If and when the tape stabilizes, the add goes to the laggards-turning-leaders — software and agentic exposure — where the correction is shallowest and the next-leg rotation most likely to begin. We wait for the Beta-Instability signals (Section 9) to confirm participation before sizing up.

(9) Knowledge Corner — Beta Instability: Why the Troops Leave Before the Generals

One of our favorite tools for catching a rotation before price makes it obvious is beta instability — a regime-change signal, not a momentum read. Here is the idea. Historically, when QQQ rises 1%, a strong semiconductor proxy like SMH might rise 1.3%. When that same SMH suddenly rises only 0.4% on an up day, the simple ratio can still look fine — but the leadership relationship has quietly broken.

The trick is to measure it on up days and down days separately, because an asset can keep its average beta while its character changes underneath. The toolbox reads five things:

Here is why this matters this week. In Tuesday’s Daily Pulse (June 2), the toolbox flagged that XSD’s upside beta to QQQ and SPY had deteriorated sharply — the equal-weight, second-tier semis had stopped participating on up days. The weakest components of a broad advance are usually the first to roll. Three sessions later, on Friday, XSD fell −11.27% — harder than cap-weight SMH at −9.22%. The signal that showed up first on the upside was confirmed on the downside. The troops left before the generals.

That is also why beta instability is the instrument for the question that decides the next leg: when the market turns back up, which basket participates first? Up-day and down-day beta is precisely how we will measure whether leadership is rotating from semis toward the agentic-software complex — the way it rotated into semis in early 2024 before consensus caught on.

The Beta Instability Toolbox is one of a set of indicators and classifiers regularly arriving on closelook.net — the kind you won’t find on standard financial sites, which still only show classic tech and quant readouts.

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(11) What May Go Wrong: Risk & Change Triggers

Last week, three triggers sat beside the rally. The scorecard now matters more than ever, because it tells you which kind of break this was.

Trigger 1 — TLT breaks below 83: NOT FIRED. TLT closed at 85.06, slipping but holding well above the 83 support that anchors the bull case. The bond market is reading a growth-driven yield blip, not a structural inflation regime. A weekly close below 83 would change that — watch it before equities do.

Trigger 2 — December WTI breaks its range higher: NOT FIRED. Crude fell this week (USO −2.72%), in a disinflationary direction. The oil-cost channel is not pricing structural inflation. Only a durable, war-driven break above the range would threaten the transitory thesis — that remains the single macro variable that could convert this correction into a cycle end.

Trigger 3 — VIXEQ runs hot while VIX sleeps: RESOLVED, VIOLENTLY. The condition we flagged as “flickering” last week — the gap between elevated single-stock vol and a dozing headline VIX — closed this week as the VIX woke up roughly +40% to 21.51. The reflexive, call-driven, short-gamma bid we described did exactly what we warned: as the flow faded, dealer buying turned to dealer selling,g, and the move accelerated. {GAP: confirm VIXEQ level now / gap status}

Trigger 4 — Asia-tech leaders roll over while the AI/semi complex softens: FIRED. This was the one we said to watch most closely, “because it can turn swiftly.” It did. Korea −14%, Taiwan −7%, semis −9% to −11%. The equity-internal trigger fired while the two macro triggers (1 and 2) did not — which is exactly why this reads as a leadership correction, not a macro break.

What Would Turn “Interruption” into “End”

Four observable shifts would escalate the current read from correction to cycle-end:

1. VEU/VT break their rising channels off the spring low — the structural falsification of the bull count.

2. A hot CPI confirming inflation as structural rather than transitory — the macro falsification of the house thesis.

3. A durable oil spike (war-driven), making unit-cost inflation structural.

4. A belated haven bid in bonds — TLT rallying as equities keep falling — which would signal the market repricing from “positioning flush” to “growth scare.”

None of the four has fired. The first three are the ones to watch through next week’s CPI and FOMC.

(12) Final Words

“The stock market is a device for transferring money from the impatient to the patient.” — Warren Buffet.t

We wrote this week’s script twice in advance — in last Saturday’s Section 11, and in Tuesday’s Daily Pulse on the second-tier semis. ThSemisek it ran. The third wave has most likely topped; the semiconductor generals broke first; the volatility we flagged woke up; and the dollar turned. By the count, a complex, multi-month Wave ④ now begins.

But read the signature, not just the screen: the damage stayed inside tech, breadth held outside it, defensives bid, and the two macro triggers that would mark a real regime change — bonds below 83, oil breaking higher — did not fire. Inflation still reads transitory, unit costs are tame, and crude is falling. This is an interruption in a bull market, not its end — and the next leg, when it comes, is more likely to rotate toward the agentic-software complex than back into the spent semiconductor trade. The one thing that could rewrite all of it lands next week: CPI.

The discipline is to respect the top, expect a choppy summer, watch the four escalation triggers — and let the laggards-turning-leaders, not the fallen generals, lead the next add.

Thank you for reading. See you next Saturday.

Thank you for reading this week's edition of Closelook@Global Stock Markets, dated November 23, 2024 👋. The next edition will be published on November 30, 2024.

The next edition of Closelook@US Stock Markets will be published on November 24, 2024.

The next edition of Closelook@Hypergrowth will be published on November 27, 2024,

A Closelook At This Edition

1. This Week's Action: Global Stocks - Two Tales of Stock Market Action

2. Global Stock Markets: Comprehensive Overview Of 36 Global Stock Markets

3. Crypto Crazy: Bitcoin, Ethereum and Solana

4. The ETF Portfolio: Continued Rebalancing

5. This Week's ETF Spotlight: VanEck Sustainable Future of Food UCITS

6. Knowledge Corner: MAHA

7. Upcoming Transactions: More Rebalancing Ahead

8. Final Words: The DOGE Initiative May Calm Bond Vigilantes

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(1) This Week's Action: Global Stocks In Retreat Mode

The week spanning from Monday, November 18 to Friday, November 22, 2024, displayed two different sets of stock market behavior.

While global stock markets outside the US were flat on aggregate on the week, the US stock markets headed north. While crypto assets move significantly higher, the Mag-7 turned into the Drag-7.

Strongest Performers

• Bitcoin led with the highest YTD return of 134.4% and the most substantial weekly gain of 10.3%

• The Nasdaq shows the best YTD performance among traditional indices at 26.6%. but was the worst of the four leading stock market indices, adding only 1.7 %.

• Oil had a strong week with a 6.3% gain but remains slightly negative for the year.

Traditional Indices

• All major stock indices show positive weekly gains, ranging from 1.7% to 4.5%.

• The Russell 2000 outperformed other stock indices for the week with a 4.5% gai.n.

• The 10-year Treasury yield remained stable at 4.41% with minimal YTD. movement.

The Dow Jones Global Index rose about 1 % for the week. The index could not break above the downward-sloping upper consolidation channel trendline.

Price action still looks like a consolidation/correction inside a bull market to me and not like the start of a reversal and a significant top. The long-term bull channel is still intact.

The index has lost about 0.5 percent in the month. It has been down 2 percent in the last 30 days. It is up 14,07 % YTD and 20,49 % in a 52-week perspective.

While the odds still favor another rate cut in December in the US, continued US rate cuts in 2025 seem more unlikely. The ECB will likely cut rates more aggressively.

This should continue to strengthen the US Dollar and keep the downward pressure on the Euro.

Looking at the global stock markets, ex, the US, the situation worsens. The chart above shows the Vanguard FTSE All World Ex US ETF. The ETF failed to make an ATH in 2024.

It has declined much more than the Dow Jones Global Index, which is heavily skewed toward the US. The index is sitting on a significant support level. If it breaks, further declines may lie ahead.

(2) Global Stock Markets: Comprehensive Overview Of 36 Global Stock Markets

Argentina, Hungary, Taiwan, Germany (DAX), and India continue to be the five best-performing global stock markets outside the US, taking a one-year perspective.

The table below displays 36 global stock markets. Laggards are Russia, Mexico, South Korea, France, and the German and Dutch midcap indices.

Until two weeks ago, the Russian RTS Index was the only index in the red and the worst-performing one globally, taking a 1-year perspective. As of 22 November 2024, Mexico, South Korea, and France have turned negative, too.

Taking a 5-day view, 17 of the 36 stock markets covered traded up for the week. Argentina was the best performer, followed by South Korea. Russia cratered.

The Nifty Fifty Index in India was up 1.5 % on the week. The Equal Weight Nifty Fifty index is sitting on a critical support level. I expect the market to move higher from here and resume its uptrend.

The same applies to the Nifty Fifty Index itself. I see India as a net beneficiary of the Trump policy.

The Euro Stoxx 50 Index was unable to reach above the consolidation trendline. It sits on the lower bull trend line, which has been developing since the start of the bull in late 2022.

A break below the trendline may indicate that a temporary end of the European bull market is ahead.

The same applies to the MSCI Eurozone ETF. It failed to make an ATH. The ETF has already broken below that bull trend line.

The same also applies to the German MDAX index. A move toward the 26000 to 25000 level seems likely.

The SDAX is negative YTD now. 13300 is a critical support level. A break below the level seems likely to me. The downtrend is firmly intact.

The ASEAN stock markets have moved in the opposite direction to the European markets recently. I expect this to continue. I also see the ASEAN countries as net beneficiaries of the Trump policy shift.

Various ASEAN indices hit the upper trend line and consolidated in the past weeks. The consolidation should be in its final stage or may have ended already. I expect the bull market to resume shortly/or have resumed already.

In contrast to the various ASEAN countries, Japan has trended down since the summer of 2024. I doubt there will be another attempt to reach the 42000 level on the Nikkei index soon.

Chart-wise, the UK stock market looks better to me now. The long-term bullish trend is still intact.

We may see a year-end rally as the consolidation/correction looks relatively complete.

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(3) Crazy Crypto

Bitcoin, Ether, and Solana have risen sharply since the Trump election victory. I believe that in the short-term they are due for a pause.

(1) Bitcoin

Bitcoin may have completed five waves up. A move above 100.000 USD may be the short-term top.

I do not see the top of the fifth wave as the top of the Bitcoin bull market, as I expect an extended impulse wave with nine legs to unfold.

I sold all my Microstrategy positions above 500 USD. Options on the IBIT BItcoin fund are a better way to embark on a leveraged Bitcoin trade, in my opinion. I only trade selling options - selling puts to play a move up and selling cally to play a move down.

Ether is still 700 points below the spring 2024 peak. I expect some catch-up to occur. But Ether looks vulnerable compared with Solana.

Solana moved past the spring 2024 highs and reached above the old ATH. I expect Solana to move close to the 300 USD level soon.

The Coin 50 index is close to its ATH. When Bitcoin consolidates, several altcoins should begin to move up considerably.

I am currently monitoring which altcoins may be suitable for a risk-on investment.

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(4) The ETF Portfolio: Continued Rebalancing

From now on, I will detail the performance of the four investor portfolios in a weekly post in the Daily Brief section of the newsletter.

This will soon entail real-time trading signals. The next update will be on Monday, November 25.

The ETF portfolio developed nicely during the week. I made three transactions.

I added to the Solana position. I rebought the INQQ Internet India ETF and I bought an initial position in the VanEck Sustainable Future of Food UCITS - a beneficiary of the Trump MAHA policy.

The two Indian ETFs and the Roundhill Weight Loss ETF are the biggest losers. The Bitcoin ETF has been the best performer.

Selling the Gold Miners ETF and replacing it with a Solana ETP proved to be correct. The S&P Capital markets ETF, a recent buy, developed nicely. The Russel Midcap Pure Growth ETF is up more than 15 percent since I bought it.

(5) This Week's ETF Spotlight: VanEck Sustainable Future of Food UCITS

The VanEck Sustainable Future of Food UCITS ETF focuses on companies pioneering sustainable food solutions.

The VanEck Sustainable Future of Food UCITS ETF tracks the MVIS Global Future of Food ESG Index. The MVIS Global Future of Food ESG Index provides access to companies worldwide engaged in developing and producing sustainable food.

The included securities are filtered based on ESG (Environmental, Social, and Governance) criteria.

The ETF's total expense ratio (TER) is 0.45% annually. The VanEck Sustainable Future of Food UCITS ETF is the only ETF that replicates the MVIS Global Future of Food ESG Index. The ETF replicates the index's performance through full replication (purchasing all the components of the index). Dividend income within the ETF is accumulated (reinvested into the ETF).

The VanEck Sustainable Future of Food UCITS ETF is a small ETF with a fund volume of €5 million. The ETF was launched in Ireland on June 24, 2022.

The ETF's sector allocation is as follows:

• Consumer Staples: 69.67%

• Basic Materials: 27.36%

• Industrials: 2.02%

• Consumer Discretionary: 0.37%

• Other: 0.58%

As of September 30, 2024, the ETF's top 10 holdings and their respective weightings are:

These top 10 holdings constitute approximately 52.78% of the ETF's total portfolio. Geographically, the ETF is diversified across several countries:

• United States: 53.77%

• Switzerland: 8.63%

• China: 5.82%

• Ireland: 4.94%

• Other: 26.84%

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Thank you for reading this week's edition of Closelook@Global Stock Markets, dated November 16, 2024 👋. The next edition will be published on November 16, 2024, at 2.00 p.m. ET.

The next edition of Closelook@US Stock Markets will be published on November 17, 2024, at 2.00 p.m. ET.

The next edition of Closelook@Hypergrowth will be published on November 20, 2024, at 2.00 p.m. ET.

A Closelook At This Edition

1. This Week's Action: Global Stocks In Retreat Mode

2. Global Stock Markets: Comprehensive Overview Of 36 Global Stock Markets

3. Trump Sectors: Hidden Winners, Obvious Losers And More

4. The ETF Portfolio: Continued Rebalancing

5. This Week's ETF Spotlight: ETFs For Hedging

6. Knowledge Corner: The German Stock Market

7. Upcoming Transactions: More Rebalancing Ahead

8. Final Words: Trump 2.0 vs Obama 3.0 (aka Biden 1.0)

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(1) This Week's Action: Global Stocks In Retreat Mode

The week spanning from Monday, October 28 to Friday, November 01, 2024, displayed severe cracks in the global bull market narrative. The week spanning from Monday, 04 November until Friday, 08 November, displayed stock markets in bifurcation mode and seemed to have healed most of those cracks.

This assessment may have been wrong as the global stock markets resumed their path down in the week spanning from Monday, 11 November until Friday, 15 November.

The Dow Jones Global Index has been in a consolidation mode since the end of September 2024. The long-term bull channel is still intact.

The index lost about 1.6 percent on the week. It has been down 2 percent in the last 30 days. It is up 12,75 % YTD and 20 % in a 52-week perspective.

I expected a break above the trendline to occur this week if the US CPI and PPI showed that inflation was still moderating, kicking off the traditional year-end rally, which may last until the end of January (typical seasonal pattern).

The break-out failed when Chair Powell indicated that the Fed was in no hurry to lower rates and when the inflation figures in the US revealed continued stickiness in the core inflation and super core inflation subsectors.

While the odds still favor another rate cut in December, continued US rate cuts in 2025 seem more unlikely. This strengthened the US Dollar and at least temporarily ended the rally in gold.

Looking at the global stock markets, ex, the US, the situation worsens. The chart above shows the Vanguard FTSE All World Ex US ETF. The ETF failed to make an ATH in 2024.

It has declined much more than the Dow Jones Global Index, which is heavily skewed toward the US. However, the long-term bull channel is still intact.

(2) Global Stock Markets: Comprehensive Overview Of 36 Global Stock Markets

Argentina, Taiwan, Hungary, Taiwan, Germany (DAX), Spain, and India continue to be the seven best-performing global stock markets outside the US, taking a one-year perspective.

The table below displays 36 global stock markets. Laggards are Russia, Mexico, South Korea, and the German and Dutch midcap indices.

Until last week, the Russian RTS Index was the only index in the red and the worst-performing one globally, taking a 1-year perspective. As of 15 November 2024, Mexico, South Korea, and the German MDAX have turned negative, too.

Taking a 5-day (the week after Trump's victory) view, only six of the 36 stock markets covered traded up for the week - Argentina, Norway, Hungary, Spain, Dutch AMX, and Austria.

Most of the biggest Asian stock markets performed miserably. Russia gave back part of the gains recorded in the week before.

The difference between the German DAX, MDAX, and SDAX is striking. The MDAX trades around 26,500, nearly 10,000 points below its 2021 peak. It is trading around the 2017/18 levels.

Using the DAX price index instead of the DAX performance index to compare the performance of the DAX with the major global stock markets, the stellar performance of the DAX companies becomes a bit more muted, too.

The index is 20 percent above the dot.com bubble peaks recorded over 20 years ago.

The DAX Performance Index is one of the best indices globally - the power of reinvesting dividends. Most major indices are price indices, however. So, using the DAX Performance Index for comparison leads to a distorted analysis.

The DAX Net Return Index deducts taxes from performance and is an accurate index for net returns.

The DAX Net Return Index, measured in USD, is best used internationally outside the Eurozone.

While the MDAX lags behind the DAX, the performance of the SDAX measuring small-cap stocks in Germany is even worse. At 5775 points, it is roughly 2,300 points below its 2021 peak.

The Russel 2000 has underperformed the SP 500 in the last few years, but compared with the SDAX, the Russel 2000 performance looks solid.

The dire state of the German economy can also be seen in the performance of the German TECDAX.

It was stellar from the bottom of the GFC until the Covid-19 peak. It has been a miserable performer since then. Trading at around 2,450, it is still more than 600 points below the Covid peak.

Times have changed, and the old German business model has stopped working. Charts and price action do not lie.

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(3) Trump Sectors: Hidden Winners, Obvious Losers, And More

Based on this week's market reaction, the following market sectors may be net beneficiaries of the Trump election and have either sound or improving funnymentals and technicals.

(1) The Good

Crypto

1. Bitcoin

2. Altcoins

3. The related digital asset industries with stocks such as Coinbase, MicroStrategy, crypto miners, and ETFs such as the ones detailed in the table below.

MAHA (make America healthy again) Stocks

1. Clean food stocks such as Sprouts Farmers Market and similar

2. Personalized genetic testing and diagnostics stocks such as Natera

3. Dietary Supplement Industry (GNC Holdings or Vitamin Shoppe)

4. Fitness and Wellness Services (Planet Fitness, Peloton Interactive

Government Efficiency Stocks

Companies specializing in streamlining processes, reducing bureaucracy, and enhancing efficiency through technology could benefit. For example:

• IT consulting firms like Accenture or Deloitte which help organizations optimize their operations.

• Software companies such as Salesforce, ServiceNow, or Oracle which provide tools for workflow automation and efficiency

Tax Beneficiaries

The sectors that pay the highest taxes in the US as a percentage of their economic activity or net worth are:

Manufacturing

• Manufacturing firms pay a significantly higher share of corporate income taxes relative to their net worth and receipts. According to the Urban Institute, manufacturing firms paid about 28% of total corporate income taxes after credits despite accounting for only 15.1% of net worth and 29.4% of business receipts.

Wholesale and Retail Trade

• Wholesale and retail trade companies also pay a high share of taxes. They accounted for about 15.7% of corporate income taxes after credits, which is higher than their share of net worth (4.8%) but relatively in line with their share of business receipts (30.2%)

Finance and Insurance

• While finance and insurance companies have a large share of net worth (57.3%), they pay a relatively lower share of taxes (19.4%) compared to their economic size. However, this sector still contributes significantly to corporate tax revenue.

Key Statistics

• Manufacturing: 28.0% of corporate taxes, 15.1% of net worth, 29.4% of business receipts

• Wholesale and Retail Trade: 15.7% of corporate taxes, 4.8% of net worth, 30.2% of business receipts

• Finance and Insurance: 19.4% of corporate taxes, 57.3% of net worth, 8.5% of business receipts

Cyclical US Industrial Reflation Stocks

Under a second Trump administration, several sectors and stocks could benefit from the proposed policy changes, particularly those related to cyclical US industrial reflation.

Energy and Natural Resources

• Trump's policies favoring domestic energy production, such as rolling back environmental regulations and expanding drilling in the Gulf of Mexico and Alaska, would benefit energy companies.

  • Oilfield services companies: Haliburton, Schlumberger, and other oilfield services providers would likely see increased activity and profits.

  • Natural gas companies: Companies like EQT and CNX Resources could benefit from expanded drilling and pipeline projects

Manufacturing and Industrial Sector

• The proposed reduction in corporate tax rates to 15% for companies producing goods domestically, along with enhanced tax credits and subsidies, would incentivize manufacturing growth.

  • Automotive manufacturers: Companies like General Motors, Ford, and Stellantis could benefit from reduced taxes and potential tariffs on imported vehicles, although they might face challenges from tariffs on components sourced from Mexico

  • Industrial equipment manufacturers: Companies such as Caterpillar and Deere & Company could see increased demand and profitability due to lower taxes and deregulation

Financial Sector

• Banks and financial institutions are expected to benefit from Trump's policies, including higher interest rates and deregulation.

  • Bank stocks: Companies like JPMorgan Chase, Bank of America, and Wells Fargo could see improved performance due to higher interest rates and reduced regulatory burdens

Defense and Aerospace

• Trump's support for increased defense spending and a more robust military would benefit defense contractors.

  • Companies like Lockheed Martin, Boeing, and Northrop Grumman could see increased contracts and profitability.

Infrastructure and Construction

• The anticipated boost in domestic manufacturing and infrastructure projects could benefit construction and related services companies.

  • Companies like Fluor Corporation, Jacobs Engineering Group, and Martin Marietta Materials could see increased activity and profits from infrastructure projects.

Cyclical Stocks

• Cyclical stocks, heavily influenced by economic cycles, will likely benefit from Trump's pro-business and pro-growth policies.

  • Steel producers: Companies like Nucor and US Steel could benefit from tariffs on imported steel and increased domestic demand

  • Chemical and materials companies: Companies like Dow Inc. and DuPont could see increased demand and profitability due to lower taxes and deregulation

Key Stocks to Watch

• Haliburton (HAL)

• Schlumberger (SLB)

• EQT Corporation (EQT)

• CNX Resources (CNX)

• General Motors (GM)

• Ford Motor Company (F)

• Caterpillar Inc. (CAT)

• Deere & Company (DE)

• JPMorgan Chase & Co. (JPM)

• Bank of America Corp. (BAC)

• Wells Fargo & Company (WFC)

• Lockheed Martin Corp. (LMT)

• Boeing Co. (BA)

• Northrop Grumman Corp. (NOC)

• Fluor Corp. (FLR)

• Jacobs Engineering Group Inc. (J)

• Martin Marietta Materials Inc. (MLM)

• Nucor Corp. (NUE)

• United States Steel Corp. (X)

• Dow Inc. (DOW)

• DuPont de Nemours Inc. (DD)

These companies and sectors will likely benefit from the combination of lower corporate tax rates, deregulation, and protectionist trade policies that Trump has proposed.

(2) Not Sure, Maybe, Neutral, Let’s See

1. Small Cap US Stocks in General: Only if interest rates do not rise too much

2. Taiwan Stocks: The markets anticipate that Taiwan may benefit from the Chinese stimuli. The AI-related and semiconductor-based bull market is in full swing and will continue in 2025 and 2026.

3. Russian Stocks: The markets seem to anticipate a Ukraine-Russia deal brokered by the Trump administration, but who knows?

(3) The Bad

1. European stocks: Trump does not care about Europe. Tariffs will hurt the European exporters, and the Eurozone faces structural problems. Germany is a nightmare on its own. Europe lacks an attractive tech sector in which to invest.

2. Rate-sensitive emerging markets: If bond vigilantes start to threaten the US credit markets and long-term rates go up beyond 4.5 % (and move close to 5 %), this will hurt some emerging countries with debt tied to the US Dollar and US interest rates.

3. Alternative energy (solar, wind, etc.): The losers from the drill baby drill approach

4. Chinese exporters and internationally oriented companies, incl. some Internet: Unless there is a deal (brokered by Elon Musk?), I see these companies as big losers.

(4) The Ugly

Japan

Japan is the only developed market economy with rising interest rates and a monetary policy that is becoming more restrictive. This usually does not bode well for equities.

The stock market may have completed nine waves up and may be in a more significant corrective phase.

United Kingdom

The UK stock market looks toppy to me. It is another European crisis economy.

Last week, the market broke below a vital support line.

I do not see a lot of attractive stock market sectors in the UK.

(4) The ETF Portfolio: Continued Rebalancing

From now on, I will detail the performance of the four investor portfolios in a weekly post in the Daily Brief section of the newsletter.

This will soon entail real-time trading signals. The next update will be on Sunday, November 17.

The ETF portfolio lost value during the week, which is in line with the performance of the key regions to which it has been exposed.

The two Indian ETFs and the Roundhill Weight Loss ETF are the biggest losers. The Bitcoin ETF has been the best performer.

I sold the Gold Miners ETF and replaced the “hedge position” with a Solana ETP.

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(5) This Week's ETF Spotlight: German ETFs

ETFs to invest in different sectors of the German stock market entail:

(1) GX DAX Germany ETF (DAX)

The Global X DAX Germany ETF seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the DAX Index.

(2) Germany Ishares MSCI ETF (EWG)

The iShares MSCI Germany ETF seeks to track the investment results of an index composed of German equities. The ETF seeks investment results that correspond generally to the price and yield performance of the MSCI Germany Index.

(3) Germany Franklin FTSE ETF (FLGR)

The Franklin FTSE Germany ETF seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the FTSE Germany Capped Index. FTSE Germany Capped Index is a market-capitalization weighted index representing the performance of large and mid-capitalization German stocks.

(4) Germany Alphadex Fund FT (FGM)

The Fund's objective is to seek investment results that generally correspond to the price and yield of an equity index called the NASDAQ AlphaDEX Germany Index before the Fund's fees and expenses.

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Thank you for reading this week's edition of Closelook@Global Stock Markets, dated November 09, 2024 👋. The next edition will be published on November 16, 2024, at 2.00 p.m. ET.

The next edition of Closelook@US Stock Markets will be published on November 10, 2024, at 2.00 p.m. ET.

The next edition of Closelook@Hypergrowth will be published on November 13, 2024, at 2.00 p.m. ET.

A Closelook At This Edition

1. This Week's Action: Global Stocks In Bifurcation Mode

2. Global Stock Markets: Comprehensive Overview Of 36 Global Stock Markets

3. Trump Markets: The Good, the Bad and the Ugly

4. The ETF Portfolio: Some Bigger Changes

5. This Week's ETF Spotlight: Potential Trump Winner ETFs

6. Knowledge Corner: Investment Ratios

7. Upcoming Transactions: More Rebalancing Ahead

8. Final Words: Don’t Fight The Fed, And Don’t Argue With The Tape

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(1) This Week's Action: Global Stocks In Bifurcation Mode

The week spanning from Monday, October 28 to Friday, November 01, 2024, displayed severe cracks in the global bull market narrative. The week spanning from Monday, 04 November until Friday, 08 November, displayed stock markets in bifurcation mode and healed most of those cracks.

Three groups of markets could be identified - the good, the bad, and the ugly. Group Good stock markets are beneficiaries of the Trump victory. Group Bad stock markets identified themselves as losers. Group Ugly stock markets were in bad shape before the US election, which did not change after the election result.

The Dow Jones Global Index moved north in the past week - from the 4900 level to 5000 (see above chart, top left).

It broke the very short-term downward channel to the upside (see above chart, top right). It found resistance at the downward-sloping consolidation trendline, which formed in September 2024 and provided resistance to the rise of the index in late October (see above chart, bottom left).

I expect a break above the trendline to occur next week if the US CPI and PPI show that inflation is still moderating (see above chart, bottom left).

This may lead to the traditional year-end rally, which may last until the end of January (typical seasonal pattern).

The index looks like there will be a further extension inside an already extended wave 3 before a more significant consolidation wave 4 is shaping.

The price action since the end of September looks like a consolidation inside an ongoing bull market and not like a topping formation. The long-term bull market channel is fully intact.

(2) Global Stock Markets: Comprehensive Overview Of 36 Global Stock Markets

Argentina, Taiwan, Hungary, Germany (DAX), Spain, and India continue to be the six best-performing global stock markets outside the US, taking a one-year perspective.

The table below displays 36 global stock markets. Laggards are France, Mexico, South Korea, and the German MDAX.

The only index in the red, the worst-performing index globally, taking a 1-year perspective, continues to be the Russian RTS Index.

Taking a 5-day (Trump week) view, the picture changes considerably. Various Chinese stock markets have been the top performers. The Russian stock market also greeted the Trump victory with joy, as did Taiwan stocks.

Laggards have been European stocks as well as those in Indonesia and India. The failure of the ruling coalition distorted price action in Germany.

Inside China, stocks benefiting from more domestic stimulus have been top performers. I expect the second leg of the China bull to manifest now, led by domestically oriented stocks.

The Russian RTS index has been in a multi-year bear market. This may end soon. The markets anticipate a Trump-brokered deal between Ukraine and Russia to occur relatively quickly.

The Indian Nifty Index has been in corrective territory since September 2024. I believe the index may have found a bottom and will start another bull leg soon.

It broke above the short-term downward trend line and found support at the 24000 level.

I will be adding to the current positions starting next week. The first level to buy is at 24000 on the Nifty-Fifty index, and the second and third are at 22800 and 22000.

The Euro Stoxx 50 Index moved lower by about three percent during the past week. It again found support at the critical 2-year trend line.

A heavy resistance zone has formed from 5000 to the spring 2024 tops.

The index may see a new 52-week high, but the move looks like the final move up (for quite some time).

Europe looks like the big loser of the Trump election.

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(3) Trump Markets: The Good, the Bad and the Ugly

Based on the initial market reaction, the following global markets may be net beneficiaries of the Trump election and have either sound or improving funnymentals and technicals.

The Good

1. Domestic Chinese stocks: There will be additional government stimuli to offset the Trump tariffs.

2. Small Cap US stocks: Only if interest rates do not rise too much

3. Taiwan stocks: The markets anticipate that Taiwan may benefit from the Chinese stimuli. The AI-related and semiconductor-based bull market is in full swing and will continue in 2025 and 2026.

4. Russian stocks: The markets seem to anticipate a Ukraine-Russia deal brokered by the Trump administration.

5. Domestic energy stocks: Drill baby drill has been one of the Trump slogans.

The Bad

1. European stocks: Trump does not care about Europe. Tariffs will hurt the European exporters, and the Eurozone faces structural problems. Germany is a nightmare on its own. Europe lacks an attractive tech sector in which to invest.

2. Rate-sensitive emerging markets: If bond vigilantes start to threaten the US credit markets and long-term rates go up beyond 4.5 % (and move close to 5 %), this will hurt some emerging countries with debt tied to the US Dollar and US interest rates.

3. Alternative energy (solar, wind, etc.): The losers from the drill baby drill approach

4. Chinese exporters and internationally oriented companies, incl. some Internet: Unless there is a deal (brokered by Elon Musk?), I see these companies as big losers.

The Ugly

1. Japan

Japan is the only developed market economy with rising interest rates and a monetary policy that is becoming more restrictive. This usually does not bode well for equities.

The stock market may have completed nine waves up and may be in a more significant corrective phase.

2. United Kingdom

The UK stock market looks toppy to me. It is another European crisis economy.

Last week, the market broke below a vital trendline, giving multi-year support.

The UK stock market initially moved up on the Trump election win, only to crater heavily and finish the week in the red.

I do not believe that Donald Trump has any ambition to maintain a special relationship between the UK and the US. The new Labor government turns out to be less friendly to the capital markets.

The economic ties with the EU are only improving slowly. The global trading ambitions of the UK after Brexit turn out to be mostly impossible to achieve.

I do not see a lot of attractive stock market sectors in the UK.

(4) The ETF Portfolio: Some Bigger Changes

The ETF portfolio has increased during the week, reaching an all-time high in mid-October.

The two Indian ETFs and the Roundhill Weight Loss ETF trade in the red. The Bitcoin ETF, the Russel MidCap Pure Growth ETF, and the Global X ETF have been the best performers.

I sold the Chinese Krane Internet ETF and added the S&P Capital Markets ETF SPDR (KCE) and the Russel 2000 Growth Ishares ETF (IWO), which I will detail in the next section.

(5) This Week's ETF Spotlight: Potential Trump Winner ETFs

Financial stocks, small/midcap stocks, and digital asset stocks may be Trump winners.

(1) S&P Capital Markets ETF SPDR (KCE)

The S&P Capital Markets ETF SPDR seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the SP Capital Markets Select Industry Index.

The ETF is well diversified. Exposure to regional banks is minimal.

The table below shows a list of 20 ETFs in the segment. KCE is the nu, number two performing ETF.

(2) Russel 2000 Growth Ishares ETF (IWO)

The iShares Russell 2000 Growth ETF seeks to track the investment results of an index composed of small-capitalization U.S. equities that exhibit growth characteristics.

The Fund seeks investment returns that correspond to the performance of the Russell 2000 Growth Index.

The Index measures the performance of the small-capitalization growth sector of the U.S. equity market.

The fund has more than 1000 stocks in the portfolio and is well diversified.

(3) Vaneck Digital Transformation ETF (DAPP)

The VanEck Digital Transformation ETF (DAPP) is a nightmare for value investors.

It contains all the leading crypto miners, leveraged bitcoin proxies, and more that value investors think will soon go to zero. Digital asset enthusiasts like the industry's assortment of A-team and B-team stocks.

Donald Trump is rumored to be very Crypto-friendly. This would be one way to play the trend.

The ETF is only suited for speculative minds. I am not sure yet whether I will add it to the portfolio. I may increase the current Bitcoin ETF position instead.

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Thank you for reading this week's edition of Closelook@Global Stock Markets, dated November 02, 2024 👋. The next edition will be published on November 09, 2024, at 2.00 p.m. ET.

The next edition of Closelook@US Stock Markets will be published on November 03, 2024, at 2.00 p.m. ET.

The next edition of Closelook@Hypergrowth will be published on November 06, 2024, at 2.00 p.m. ET.

A Closelook At This Edition

1. This Week's Action: Global Stocks In Corrective Mode

2. Global Stock Markets: Comprehensive Overview Of 30 Global Stock Markets

3. Macro Insights: Trussonomics 2.0 Ante Portas?

4. The ETF Portfolio: Some Bigger Changes

5. This Week's ETF Spotlight: A New Semiconductor ETF

6. Knowledge Corner: Yield Curves, Inflation, Real Rates, Trussonomics and the Presidential Candidates

7. Upcoming Transactions: Waiting Until After the Election

8. Final Words: Challenging the Bull Narrative

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(1) This Week's Action: Global Stocks In Corrective Mode

The week spanning from Monday, October 28 to Friday, November 01, 2024, displayed severe cracks in the global bull market narrative.

The Dow Jones Global Index moved down to the 4900 level and found support at the upward-sloping lower trend channel line, which has defined the lower boundaries of the bull market channel since autumn 2023. The long-term bull market channel was not violated.

The index looks like it has completed an extended wave 3 and is setting up for a consolidation wave 4.

There is support at the 4800 level (between 4850 and 4770) and between 4600 and 4500.

Taking a very long-term view, the bull is stretched. It has touched the decade-long upward-sloping upper trend line.

The index may be about to form a long-term bearish wedge. Right now, the wedge appears incomplete, suggesting that there is more upside to the bull narrative after a period of consolidation.

A short-term downward channel has formed, which may provide resistance to any move north in the coming week(s).

(2) Global Stock Markets: Comprehensive Overview Of 30 Global Stock Markets

Argentina, Taiwan, Hungary, Spain, and Germany (DAX) continue to be the five best-performing global stock markets outside the US, taking a one-year perspective.

The table below displays 36 global stock markets. Laggards are France, China, and Mexico.

The only index in the red, the worst-performing index globally, taking a 1-year perspective, has been the Russian RTS Index.

Taking a 30-day view, laggards have become top performers, with the mainland Chinese and Hong Kong markets leading.

Argentina is the best-performing country, followed by the Shanghai Calls B Index, the Taiwan Weighted Index, Ibex 35, and NZZ 50. Only ten indices moved up, and 26 indices moved down.

Russia was the worst performer. However, India, Mexico, and Brazil performed badly too.

I expect another bull market leg to occur in China soon. I will cut China's exposure and trim positions on the anticipated rise.

I will be adding to the existing India positions. I expected a whole leg down in the Indian market first two weeks ago. This seems to be unfolding.

I will be adding to the current positions on any meaningful dip. The first level to buy is at 24000 on the Nifty-Fifty index, and the second and third are at 22800 and 22000.

The Euro Stoxx 50 Index moved lower during the past week. It found support at the critical 2-year trend line.

A heavy resistance zone, spanning from 5000 to the spring 2024 tops, has formed.

The index may see a new 52-week high, but the move looks like the final move up (for quite some time).

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(3) Macro Insights: Trussonomcs 2.0 Ante Portas

The bond market has started to vote early, sending a clear message ahead of the November 5 US presidential and congressional elections. Since the Federal Reserve's September 17-18 meeting, the 10-year US Treasury bond yield has surged by 77 basis points to 4.39%.

This significant increase reflects the Bond Vigilantes' concerns about Fed Chair Jerome Powell's dovish monetary policy and the potential for economic overheating.

Market Reaction and Analysis

On Monday, October 28, 2024, the Treasury announced its marketable borrowing estimates. The projected financing is $546 billion in Q4-2024 and $823 billion during Q1-2025.

This announcement comes against a staggering national debt, currently at $35.5 trillion. This includes $27.7 trillion of US Treasury marketable debt and $7.2 trillion of intragovernmental holdings.

The latter represents the government's IOUs to itself, primarily resulting from borrowing from public trust funds like Social Security and Medicare.

Alarmingly, this debt is projected to expand at an annual rate of over $1.0 trillion solely to cover the net interest outlays of the Treasury.

The Bond Vigilantes appear to be voting against the Fed's recent actions, particularly the 50 basis point rate cut on September 18. Their concern stems from the perception that the economy is already running hot and further easing could lead to overheating.

Volatility in the bond markets has risen sharply and reached new highs this week, surpassing the volatility spike seen in early August 2024.

Fiscal Policy Concerns and Challenges

The Bond Vigilantes' reaction may also reflect apprehension about future fiscal policies, regardless of which party wins the upcoming elections. Some are concerned that continued expansionary fiscal policies could further inflate the substantial federal budget deficit and fuel inflation.

The next administration will face significant fiscal challenges, particularly regarding debt servicing:

The next administration will face net interest outlays of over $1 trillion on the ballooning federal debt.

This underscores the growing burden of interest payments on the federal debt, likely influencing future fiscal and monetary policy decisions.

(4) The ETF Portfolio: Some Bigger Changes

The ETF portfolio has moved lower during the week after reaching an all-time in mid-October. It has still been up since starting on 1 August 2024.

The two Indian ETFs and the China Kranes CSI Internet ETF trade lower from where

I bought and recommended them. I replaced the traditional VanEck Semi ETF with the new Fabless Semi ETF.

I also added the new Blackrock ETFs focusing on the largest 30 Nasdaq 100 stocks and 20 SP 500 stocks to the portfolio and sold the two US-based tech ETFs I initially bought. I have described the three ETFs in the following section.

(5) This Week's ETF Spotlight: A New Semiconductor ETF

Blackrock has just launched two exchange-traded funds that I have added to the ETF portfolio. VanEck launched a sector ETF, which I have added.

(1) iShares Nasdaq Top 30 Stocks ETF

The iShares Nasdaq Top 30 Stocks ETF (QTOP.O) lets investors hold the 30 biggest non-financial stocks, including mega-cap tech. It has secured backing from the University of California's investing arm.

iShares Nasdaq Top 30 Stocks ETF (QTOP)

• Fund Objective: Invests in the 30 largest companies by market capitalization within the Nasdaq 100 index.

• Number of Holdings: 30.

• Top Three Holdings: Apple (AAPL), Nvidia (NVDA), and Microsoft (MSFT).

• Expense Fee: 0.20%.

The expense ratio is 0.20%.

(2) iShares Top 20 U.S. Stocks ETF

The iShares Top 20 U.S. Stocks ETF offers access to the 20 largest U.S. companies.

iShares Top 20 U.S. Stocks ETF (TOPT)

• Fund Objective: Invests in the 20 largest U.S. companies by market capitalization within the S&P 500 index.

• Number of Holdings: 20.

• Top Three Holdings: Apple (AAPL), Nvidia (NVDA), and Microsoft (MSFT).

• Expense Fee: 0.20%.

The top 20 companies in the S&P 500 have contributed to more than two-thirds of the index's returns over the past three years.

The iShares Top 20 U.S. Stocks ETF (TOPT) and iShares Nasdaq Top 30 Stocks ETF (QTOP) are rebalanced quarterly.

This schedule allows the funds to adjust their holdings according to the top U.S. and Nasdaq-listed companies' current market values and rankings in their respective portfolios, ensuring alignment with their indices. These quarterly adjustments help the ETFs maintain their target exposure to the largest companies within their focus areas.​

(3) VanEck Fabless Semiconductor ETF

The VanEck Fabless Semiconductor ETF (SMHX) is a new offering focusing exclusively on fabless semiconductor companies. These firms design, develop, and market chips while outsourcing manufacturing to third-party foundries like Taiwan Semiconductor.

This business model, which emerged in the 1980s, allows companies to concentrate on innovation and design without the massive capital expenditure required for manufacturing facilities. SMHX tracks the MarketVector US Listed Fabless Semiconductor Index, offering a more targeted approach than its broader counterpart, SMH.

To be included, companies must generate at least 50% of their revenue from fabless semiconductor operations. The ETF employs a modified market-cap-weighted methodology and rebalances quarterly. Key features of SMHX include:

1. Concentrated portfolio: Top 10 holdings represent 73.92% of total assets.

2. Top holdings: Nvidia (21.87%), Broadcom (14.78%), and Astera Labs (6.67%).

3. Expense ratio: 0.35%, matching SMH.

4. Current AUM: $9.43 million.

5. Average daily trading volume: Around 27,000.

6. There are no dividend distributions at present.

SMHX has shown promising momentum, up close to 10% since early October 2024. While it shares some holdings with SMH, SMHX's portfolio includes pure-play design companies that are absent from its broader counterpart.

The ETF's launch and early success reflect growing investor recognition of the fabless model's advantages. However, investors should note that both SMHX and SMH have a significant Nvidia-heavy skew. Those looking to mitigate single-stock risk in the semiconductor space might consider an equal-weighted fund as an alternative.

The ETF maintains a concentrated portfolio structure, similar to its older sibling, with its top 10 holdings representing 73.92% of total assets. While both funds feature Nvidia as their top holding, SMHX has a 21.87% allocation. 

The remaining holdings reflect SMHX's fabless focus, with Broadcom (AVGO) at 14.78% and Astera Labs (ALAB) at 6.67%. Other vital positions entail Advanced Micro Devices (AMD) (4.66%), Synopsys (SNPS) (4.68%), Qualcomm (QCOM) (4.59%), Marvell Technology (MRVL) (4.49%), Arm Holdings (ARM) (4.12%), Monolithic Power Systems (MPWR) (4.10%), and Cadence Design Systems (CDNS) (3.90%).

SMHX's portfolio includes pure-play design companies that are absent from its broader counterpart.

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Thank you for reading this week's edition of Closelook@Global Stock Markets, dated October 26, 2024 👋. The next edition will be published on November 02, 2024, at 2.00 p.m. ET.

The next edition of Closelook@US Stock Markets will be published on October 27, 2024, at 2.00 p.m. ET.

The next edition of Closelook@Hypergrowth will be published on October 30, 2024, at 2.00 p.m. ET.

A Closelook At This Edition

1. This Week's Action: Global Stocks In Consolidation Mode

2. Global Stock Markets: Comprehensive Overview Of 30 Global Stock Markets

3. Macro Insights: Bond Vigilantes Are Back

4. The ETF Portfolio: Some Good, Some Bad, Some Need Polishing

5. This Week's ETF Spotlight: Two New ETFs To Form The Core Of The Portfolio

6. Knowledge Corner: What Are Bond Vigilantes And Why Do They Matter?

7. Upcoming Transactions: 10 Days Until Election

8. Final Words: Presidents Come And Go, But This Election May Matter More Than Other Ones

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This Week's Action: Global Stocks In Consolidation Mode

The week spanning from Monday, October 21 to Friday, October 25, 2024, presented another consolidation week for the global bull market narrative.

The Dow Jones Global Index moved down, potentially setting up for another bull market leg later this year.

The long-term bull market channel was not violated. The index currently tests support around the 4940 - 4950 level and may even go lower to test the 4800 level.

Taking a very long-term view, the bull is already stretched. It has touched the decade-long upward-sloping upper trend line.

The index may be about to form a long-term bearish wedge. Right now, it appears to be incomplete, suggesting there is more upside to the bull narrative.

Global Stock Markets: Comprehensive Overview Of 30 Global Stock Markets

Argentina, Taiwan, Spain, Germany (DAX), and Hungary continue to be the five best-performing global stock markets outside the US, taking a one-year perspective.

The table below displays 36 global stock markets. Laggards are France, Thailand, and Mexico.

The only index in the red, the worst-performing index globally, taking a 1-year perspective, has been the Russian RTS Index.

Taking a 90-day view, laggards have become top performers, with the mainland Chinese and Hong Kong markets leading.

Argentina is the best-performing country outside China's mainland indices, followed by Thailand, the German MDax and Dax indices, and the Indonesian stock market.

Russia is still the worst performer. However, South Korea, the Tokyo Topix Index, the Austrian Traded Index, the Mexican Bolsa IPC Index, and the Indian Nifty Fifty indices have been negative during the last 90 days.

I expect another bull market leg to occur in China soon. I will be cutting China's exposure and selling on the anticipated rise.

I will be adding to the existing India positions. I expected another leg down in the Indian market first last week. This seems to be unfolding. I will be adding to the current positions on any meaningful dip.

The Euro Stoxx 50 Index moved sideways/slightly lower during the past week. It looks primed for advancing later this year, which I also advise selling. There is resistance at the spring 2024 tops.

The index may see a new 52-week high, but the move looks like the final move up (for quite some time).

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Macro Insights: Bond Vigilantes Are Back

The bond market has started to vote early, sending a clear message ahead of the November 5 US presidential and congressional elections.

Since the Federal Reserve's September 17-18 meeting, the 10-year US Treasury bond yield has surged by 64 basis points to 4.26% before settling down slightly and closing at 4.24 %.

This significant increase reflects the Bond Vigilantes' concerns about Fed Chair Jerome Powell's dovish monetary policy and the potential for economic overheating.

Market Reaction and Analysis

The Bond Vigilantes appear to be voting against the Fed's recent actions, particularly the 50 basis point rate cut on September 18. Their concern stems from the perception that the economy is already running hot and further easing could lead to overheating.

This market reaction was not entirely unexpected. On September 2, Ed Yardeni predicted that positive economic indicators might unsettle the bond market.

In his September 22 commentary, he further highlighted the possibility of diverging yields, with the 2-year yield potentially decreasing due to Fed easing while the 10-year yield might rise on concerns about economic overheating.

Fiscal Policy Concerns and Challenges

The Bond Vigilantes' reaction may also reflect apprehension about future fiscal policies, regardless of which party wins the upcoming elections. Some are concerned that continued expansionary fiscal policies could further inflate the substantial federal budget deficit and fuel inflation.

The next administration will face significant fiscal challenges, particularly regarding debt servicing:

The next administration will face net interest outlays of over $1 trillion on the ballooning federal debt.

This underscores the growing burden of interest payments on the federal debt, likely influencing future fiscal and monetary policy decisions.

The ETF Portfolio: Some Good, Some Bad, Some Need Polishing

The ETF portfolio has moved slightly lower during the week after reaching an all-time in mid-October. It has been up since starting on 1 August 2024.

All ETFs except the two Indian ETFs and the China Kranes CSI Internet ETF trade higher than where I bought and recommended them.

I did not buy or sell any ETFs during the week. I want to add two new ETFs to the portfolio starting next week (see next section for more information on these ETFs):

1. iShares Top 20 U.S. Stocks ETF and

2. iShares Nasdaq Top 30 Stocks ETF.

This Week's ETF Spotlight: Two New ETFs To Form The Core Of The Portfolio

Blackrock has just launched three new exchange-traded funds, including two that offer exposure to the largest U.S. stocks.

(1) iShares Nasdaq Top 30 Stocks ETF

The iShares Nasdaq Top 30 Stocks ETF (QTOP.O) lets investors hold the 30 biggest non-financial stocks, including mega-cap tech. It has secured backing from the University of California's investing arm.

iShares Nasdaq Top 30 Stocks ETF (QTOP)

• Fund Objective: Invests in the 30 largest companies by market capitalization within the Nasdaq 100 index.

• Number of Holdings: 30.

• Top Three Holdings: Apple (AAPL), Nvidia (NVDA), and Microsoft (MSFT).

• Expense Fee: 0.20%.

The expense ratio is 0.20%. The holdings as of 24 October are:

(2) iShares Top 20 U.S. Stocks ETF

The iShares Top 20 U.S. Stocks ETF offers access to the 20 largest U.S. companies.

iShares Top 20 U.S. Stocks ETF (TOPT)

• Fund Objective: Invests in the 20 largest U.S. companies by market capitalization within the S&P 500 index.

• Number of Holdings: 20.

• Top Three Holdings: Apple (AAPL), Nvidia (NVDA), and Microsoft (MSFT).

• Expense Fee: 0.20%.

The top 20 companies in the S&P 500 have contributed to more than two-thirds of the index's returns over the past three years.

The iShares Top 20 U.S. Stocks ETF (TOPT) and iShares Nasdaq Top 30 Stocks ETF (QTOP) are rebalanced quarterly.

This schedule allows the funds to adjust their holdings according to the top U.S. and Nasdaq-listed companies' current market values and rankings in their respective portfolios, ensuring alignment with their indices. These quarterly adjustments help the ETFs maintain their target exposure to the largest companies within their focus areas.​

I want to add the two ETFs to the portfolio starting next week.

(3) iShares Nasdaq-100 ex Top 30 ETF

The iShares Nasdaq-100 ex Top 30 ETF (QNXT.O) will invest beyond the Nasdaq 100 behemoths to capture the growth of relatively more minor growth firms.

iShares Nasdaq-100 ex-Top 30 ETF (QNXT)

• Fund Objective: Invests in the 31st to 100th largest companies by market capitalization within the Nasdaq 100 index.

• Number of Holdings: 30.

• Top Three Holdings: Micron Technology (MU), Starbucks (SBUX), and Gilead Sciences (GILD).

• Expense Fee: 0.20%.

BlackRock recently said it had also launched two new funds centered on technology growth and artificial intelligence.

iShares A.I. Innovation and Tech Active ETF (NYSEARCA:BAI)

• Fund Objective: Invests in a concentrated portfolio of 20-40 global AI and technology stocks across all markets.

• Number of Holdings: 34

• Top Three Holdings: Nvidia (NVDA), Meta Platforms (META), and Microsoft (MSFT).

• Expense Fee: 0.68%.

iShares Technology Opportunities Active ETF (NYSE:TEK)

• Fund Objective: Invests in global technology companies across semiconductors, software, hardware, internet, services, content and infrastructure, and new industries.

• Number of Holdings: 57

• Top Three Holdings: Nvidia (NVDA), Microsoft (MSFT), and Apple (AAPL).

• Expense Fee: 0.75%.

BAI and TEK will be the latest ETFs to join several existing funds that are focused on AI and technology, including:

• KraneShares Artificial Intelligence and Technology ETF (AGIX)

• GX Artificial Intelligence & Tech ETF (AIQ)

• GX Robotics & Artificial Intelligence ETF (BOTZ)

• ALPS Disruptive Technologies ETF (DTEC)

• First Trust NASDAQ Artificial Intelligence and Robotics ETF (ROBT)

• Robo Global Artificial Intelligence ETF (THNQ)

• Roundhill Generative AI & Technology ETF (CHAT)

I will discuss these ETFs in the next edition next week.

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