Over the weekend, we were treated to the bizarre sight of the US and Iran delegations chummily sitting down together in Switzerland against a backdrop of the Strait of Hormuz being closed again after being sort of open for all of two days, Israel continuing its deadly assault on Lebanon and Trump again taking to social media to threaten more and more violence.

By the time US markets opened on Monday, UK prime minister Starmer had resigned and Andy Burnham will become the country’s sixth leader in seven years next month after a weeks-long, slow-moving political coup. Initially at least, local financial markets appeared to be taking it in stride.

The US indexes drifted lower in a vacuum of any credible US/Iran news beyond the endless tiresome spin from both sides, dragged down by profit-taking mainly in Big Tech/AI names including a rout of SpaceX, now down over 27% from its post-IPO high, having shed over $600 billion in value and reduced Musk from a trillionaire to a mere billionaire.

Asian stocks crashed on Tuesday with trading halted by circuit-breakers in South Korea in the midst of a 10% plunge on a wave of selling of chip stocks, which spilled into Europe and the US on renewed fears that all this AI buildout is simply costing too much money amidst far-from-certain customer demand and could have resulted in over-valuation of many names including on Wall Street where the NASDAQ-100 tumbled by well over 3%.

Things calmed down in Asia on Wednesday and there was an initial hard rebound when markets opened in New York as dip-buyers waded back in looking for bargains after Tuesday’s global chip-wreck, but they quickly withdrew as tech worries set in again and the indexes closed a touch lower for the session.

With exquisite timing, chip/memory giant Micron, considered by many to be the new Nvidia, reported earnings after hours in a jittery environment and crushed all the analyst estimates. The stock soared in the after-market.

This looked like it was just the boost that the stalled-out rally needed and US tech stocks came roaring out of the gate on Thursday, but once again doubts crept in later in the day after Apple and Microsoft were heavily punished following announcements of sweeping product price increases, OpenAI apparently considering a postponement of its IPO due to turbulent tech market conditions and reported firefights in the Strait of Hormuz.

PCE inflation came in as expected at 4.1%, its highest level for over three years and more than double the Fed’s 2.0% target (which it hasn’t met for more than five years). Stocks closed slightly lower on the day.

Following more tough sessions in Japan and South Korea, the US indexes went nowhere on Friday, essentially hugging the flatline all session but did complete a fifth straight day in the red for the first time this year, closing out a disappointing week but one that could definitely have been a lot worse.

Some other things I’m thinking about ..

* The best-performing stock of the so-called Magnificent Seven this year (Alphabet/Google) doesn’t even make the list of the 200 top-performing stocks of 2026. The AI investment cycle is maturing to a stage that is increasingly sensitive to more traditional equity market fundamentals and standards and the last few years’ outperformance of the Mag 7 could be coming to its inevitable end.

* Gold and crypto both continue to disappoint their ever-dwindling armies of retail super-fans and prices crapped out again last week with Bitcoin in tatters, dipping below $59k and now worth less than half what it was just nine months ago. The “quick buck” crowd are turning their limited attention span to other outlets; prediction markets, sports betting and zero-day options contracts, for example, to feed their depravity and are pulling assets from their gold and crypto holdings to plough into these shiny new toys.

* Oil prices have now round-tripped to where they were on the eve of the war. The same cannot be said of shorter term interest rates. On February 27th, the two-year Treasury rate was 3.38%. Last week it touched 4.24% before pulling back. That’s a major and sustained shift and reflective of a significant change in the outlook for where the Fed Funds Rate is heading (see INTEREST RATE EXPECTATIONS below).

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ARTICLE OF THE WEEK ..

How big should your emergency fund be? It’s not just a math question.

.. AND I QUOTE ..

“The number-one job of the hedge-fund manager is not to make sure that you can retire with a smile on your face - it's for him to retire with a smile on his face.”

Mark Cuban

LAST WEEK BY THE NUMBERS:

Last week’s S&P 500 market color courtesy of finviz.com

* SPY, a US Large Cap ETF, tracks the S&P 500 index, made up of 500 stocks from a universe of the largest US companies. It fell 2.1% last week, is higher by 15.3% over the last three months and is up 7.5% so far this year.

* IWM, a US Small Cap ETF, tracks the Russell 2000 index, made up of the bottom two-thirds in terms of company size of a universe of 3,000 of the largest US stocks. It rose 1.3% last week, is higher by 19.0% over the last three months and is up 22.3% so far this year.

* VXUS, an International Non-US ETF, tracks the MSCI ACWI Ex-US index, made up of over 8,500 of the largest names from a universe of stocks issued by companies from around the world excluding the United States, in both developed and emerging markets. It fell 2.5% last week, is higher by 13.6% over the last three months and is up 12.6% so far this year.

Data shown is total return (including dividends)

INTEREST RATES:

* FED FUNDS RATE * 3.625% (unchanged from a week ago)

* PRIME RATE ** 6.75% (unchanged from a week ago)

* 3 MONTH TREASURY 3.83% (3.83% a week ago)

* 2 YEAR TREASURY 4.08% (4.19% a week ago)

* 5 YEAR TREASURY 4.12% (4.23% a week ago)

* 10 YEAR TREASURY *** 4.38% (4.46% a week ago)

* 20 YEAR TREASURY 4.87% (4.91% a week ago)

* 30 YEAR TREASURY 4.87% (4.90% a week ago)

Data courtesy of the Federal Reserve and the Department of the Treasury as of Friday’s market close.

* Decided upon by the Federal Reserve Open Market Committee at periodic meetings 8x a year. Used as a basis for overnight interbank loans and for determining high yield savings interest rates.

** Wall Street Journal Prime Rate as of Friday’s close. Tending to move in lockstep with the Fed Funds Rate, this measure is used as a basis for determining certain consumer loan interest rates such as credit cards, auto loans, personal loans, home equity loans/lines of credit and securities-based lending.

*** Used as a basis for determining mortgage interest rates.

AVERAGE 30-YEAR FIXED MORTGAGE RATE:

* 6.49%

One week ago: 6.47%, one month ago: 6.52%, one year ago: 6.77%

Data courtesy of the Federal Reserve Bank of St. Louis.

INTEREST RATE EXPECTATIONS:

Where will the Fed Funds interest rate be after the next rate-setting meeting on July 29th?

* 0.25% higher than now .. 30% probability (38% a week ago)<...