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 a 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 truer 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 as 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.

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