"The Test Moved West"

This week's edition of Closelook@Global Stock Markets, dated July 25, 2026.

For two letters running, the stress in this book came from Asia: first the Tokyo leverage unwind, then a Chinese model that claims to design chips. This week the direction of travel reversed. The market-implied odds of a September Fed hike went from roughly one-in-five to above eighty percent in a single week, spot crude traded through $100, and the US semiconductor complex closed below the support band it had held since spring — on the same day Intel delivered its fastest revenue growth since 2011 and was sold 8% for it. And the ex-US map? Taiwan finished the week green, Korea's decline shrank from double digits to one and a half points, the SK Hynix debut ended the week where it started, and the all-world ex-US benchmark outperformed both the S&P and the Nasdaq. This letter is about what it means when the test moves from the supplier's side of the AI trade to the buyer's side.

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1 · This Week's Action

The cross-asset backdrop. Oil again — USO +10.4% on the week, the second consecutive double-digit week, now +97.6% year-to-date. Copper miners joined (COPX +5.6%), silver held its bid (SLV +2.7%), and that real-asset shelf sat on top of a board whose bottom half tells the real story: the mega-cap concentrates led the equity decline again (QQQ −2.6%, QTOP −3.0%, TOPT −1.9%, against SPY −1.1%) — and this time the bond shelf fell with them (IEF −0.8%, TLT −1.3%). That is the week's signature. In the Tokyo-unwind week, Treasuries caught the safety bid; this week they were part of the problem. When stocks and bonds fall together, the market is not repricing growth — it is repricing the discount rate. Gold (+1.1%) and the dollar (+0.7%) both firmed, which is what that regime usually looks like.

The global sectors. Energy led for the third consecutive week (IXC +4.2%, now +32% YTD) — the oil chart is no longer a footnote to this board, it is the board's organizing fact. Behind it, the same defensive-and-real shelf as last week: materials +1.5%, utilities +1.3%, REITs +1.3%, industrials +1.1%, healthcare and financials modestly green. The bottom is new, though: not tech, but communication services (−4.2%) and consumer discretionary (−3.6%) — the sectors where Alphabet's post-print drift and Tesla's unrescued miss live. Global tech itself closed only −0.8%, a number that hides everything: inside it, semiconductors were cracked on Friday, software gave back an early-week rally, and the orchestration layer had its best day of the season. The aggregate is calm; the interior is violent.

The regions. No washout, no single story — which is itself the story after two weeks of forced selling. Norway led on the oil bid (+3.6%), Hong Kong +1.7%, Taiwan +1.4% — its first green week in three — Spain +1.2%, Argentina +1.1%. The red column is shallow: Indonesia −2.8%, Malaysia −2.0%, India −1.9%, Korea −1.4% — and Korea's number deserves a second look, because it was flat through Thursday and took nearly all of its decline in Friday's US-driven session. The one to frame: VEU closed the week at −0.35%, against −1.1% for the S&P and −2.6% for the Nasdaq. In a stress week manufactured in the US, the ex-US book outperformed the US core across the board.

The Global Compass

New this week, and recurring from here: the Compass — the same four relative-strength questions, answered the same way, every Saturday. Who leads and lags, at two horizons; and the ratios that decide the biggest allocation questions in this letter: stay home or go global, stay tech or go broad. The Asia-based home-vs-global view — the most heterogeneous one — joins next week.

Regions: the year's leaders are the month's laggards. The YTD column still belongs to the AI supply chain — Korea +68%, Taiwan +54% — with Thailand, Norway and Austria behind. Flip to the one-month column and the same two names sit at the bottom (Korea −21%, Taiwan −7%) while the month's leaders are the year's forgotten: China's large-caps +9%, Norway +8%, Hong Kong +7%, Poland +6%. That inversion is the July story in one picture: the crowded winners digesting, the money staying in the region but rotating down the leaderboard.

Sectors: one sector leads both clocks. Energy is the only sector on the board leading the year (+32%) and the month (+11%) — the oil chart translated into equity leadership. Tech is the mirror: first on the year (+27%), last on the month (−5%). The month's quiet strength — financials +6%, REITs +4%, healthcare +3% — is the defensive-and-yield shelf this letter has flagged for three weeks, now visible at the horizon where trends get set.

Stay home vs go global — the US view. The ratio tells a story the S&P's own chart hides: US leadership over the world peaked in early 2025 and has printed lower highs since. The spring-2026 recovery leg stalled this month below the old shelf, and this week the ratio ticked down again — the rest of the world outperformed America in a stress week America itself produced. One line, one question, updated weekly: is the decade-long stay-home trade resuming, or was the spring bounce the counter-trend?

Stay home vs go global — the Europe view. For a Europe-based reader the same question has a harsher answer: the home-vs-world ratio has been in a downtrend for the full three years of the chart, and every counter-rally — including this spring's — has been sold. A Europe-only book has structurally lost to a global one, SAP's week notwithstanding. That is precisely why this letter's map is built on where the flows land, not where the reader lives.

Stay tech vs go broad. The concentration trade in one line: a three-year structural uptrend that went vertical in May–June — the AI re-rating at global scale — peaked in late June, and has been rolling over since, now back at its 50-day average. Not broken, but no longer leading: the month in which SMH lost 12% while the world index barely moved is exactly this rollover, seen from above. A decisive break of the average would be the broadening signal the equal-weight bulls have waited two years for; a bounce from it would say the concentration regime survived another test.