Global Markets — Brazil Jumps 14%, Korea Falls 8%, America Takes the Year Back

1 · This Week's Action

The global view. The ex-US world index closed the week at 82.82, down 0.75% — three cents under 82.85, the structural line this letter has carried since the summer, on a weekly close for the first time. The path: Monday 83.88, Tuesday 83.81, Wednesday 82.85 — on the line to the cent — Thursday 82.18, Friday 82.82. The index sits 4.2% under its September 4 record of 86.41. The all-world index rose 0.44% to 159.83. The S&P 500 fund rose 1.16% to 778.57, a record close on Tuesday at 779.09; the Nasdaq 100 fund rose only 0.23%.

The year changed hands. The S&P 500 fund is +14.2% for 2026, the all-world index +13.3%, the world ex-US +12.6%. A week ago the ex-US world led America for the year by six tenths of a point; it led by 4.5 points five weeks ago. This week America took the lead, by 1.6 points — the fifth stay-home week in a row, and the first in which the year's order reads America first. The house cointegration monitor still lists the VEU/SPY pair as breaking, the spread now 2.6 standard deviations below its mean.

Brazil — the vote that moved a market. The week's largest move on the board had nothing to do with chips. Brazil held the first round of its presidential election on Sunday: Flávio Bolsonaro took 47.0% of the valid votes against 45.2% for President Lula, and the two go to a runoff on 25 October. On Monday São Paulo's Ibovespa rose 7.7% to 206,912, its first close above 200,000, led by the banks; in New York the Brazil fund EWZ rose 12.5% on the day, and 14.0% on the week to 43.54 — its highest close in a year, +37% for 2026. Investors read the result as a vote for tighter public finances. The Latin America fund rose 9.1%, Argentina 4.8%, Mexico 1.2%. One country's election did not change the AI map, but it did something the map rarely shows: it moved money into a market that owns no part of the AI build-out at all.

The chip corridor gave back its week. The other side of the board is the corridor that carried the quarter. Korea's fund fell 7.6% to 177.24; the Kospi lost 5.4% in its three sessions from Tuesday to Thursday — Seoul was shut on Monday and for Friday's Hangul Day holiday. Seoul sold its memory makers on Tuesday and Wednesday, and on Thursday the chip trade broke everywhere: a report put OpenAI's annual revenue nearer 50 billion dollars than 70 billion, and America's chip index fell 3.4% in a day. Taiwan's fund fell 1.7% to 114.31 — after a record close of 118.00 on Monday and a record Taiex of 49,823 on Tuesday — and Japan's fund 1.1%. Taipei was shut on Friday, so its week ends on Thursday's drop.

Inside technology — software up, chips down. The word "tech" hid two opposite weeks. Software rose: the cybersecurity fund CIBR +5.1%, the cloud fund CLOU +4.5%, software IGV +3.9% to 112.67, its highest close of 2026, internet FDN +3.3%. Chips fell: the semiconductor index −4.3%, the chip majors fund SMH −4.3%, equal-weight semis XSD −4.9%, the memory vehicle DRAM −7.4%. The money left the companies that build AI and went to the companies that run it and sell it. Global tech, which is mostly chips and the platforms, fell 1.4%. Friday's Pulse put it in four words — capex sold, apps bought — and this week the map followed: the countries that build lost, the countries that do not build gained.

The dollar — another high, and the euro at its low. The dollar fund made a new high close of the year on Wednesday at 29.04 and ended at 29.02, +0.45%; the dollar index closed at 102.23. EUR/USD fell 0.47% to 1.1200 — the euro's lowest close of 2026, under last week's 1.1248, and down 4.4% since January. The yen closed at 158.26. A dollar investor in Europe lost on the currency again; a euro investor at home holds a currency that buys a little less of everything priced in dollars every week.

The regional board — fourteen green of thirty-five. The top: Brazil +14.01%, Argentina +4.78%, China large caps +3.16%, Hong Kong +2.27%, Poland +1.84%, Indonesia +1.80%, Mexico +1.21%. The bottom: Korea −7.63%, Southeast Asia −3.34%, Austria −3.11%, the Netherlands −1.83%, Taiwan −1.74%, France −1.68%, the Euro Stoxx 50 −1.61%. Last week five were green; this week fourteen. The best-to-worst spread was 21.6 points, from 8.9 a week ago — one market up fourteen, one down eight. A board that turns greener while its leaders fall is money rotating, not money leaving.

The cross-asset backdrop — gold up, the coin down. Nine green of twelve: gold +1.17%, the S&P +1.16%, the US top-20 fund +0.82%, the long bond +0.65%, oil +0.56%, the dollar +0.45%, the belly +0.39%, the Nasdaq 100 +0.23%, silver +0.07%. The red three: the bitcoin fund −2.47%, copper miners −0.19%, the Nasdaq top-30 fund −0.09%. Brent rose above 103 dollars a barrel on Thursday. The bond funds rose a little after Monday's new low; the coin lost its floor.

The US sectors — ten of eleven green. Utilities +4.0%, staples +3.6%, energy +3.6%, health care +2.8%, consumer discretionary +2.6%, financials +2.3%, real estate +2.0%. The two red: technology −0.5% and industrials −0.4%. The equal-weight S&P rose 1.58%, the S&P 1.16%, the Nasdaq 100 0.23%; small caps fell 0.92%. Last week one sector carried the index. This week every sector but the one that led the year rose — and the average stock beat the index.

The tech ETFs — ten of twenty-one green, split down the middle. The green half is software and the internet: CIBR +5.06%, CLOU +4.51%, IGV +3.91%, FDN +3.28%, fintech +2.69%, gaming +2.62%, data centers +2.57%. The red half is silicon: digital transformation −6.75%, XSD −4.91%, SMH −4.32%, the Internet of Things −3.31%, the fabless fund −2.84%, the WisdomTree AI fund −2.62%, quantum −2.56%. Last week software rose with the chips. This week it rose against them.

The global sectors — the defensives led. Nine of eleven green: staples +3.45%, energy +3.44%, utilities +2.72%, health care +2.29%, discretionary +2.07%, materials +1.19%, financials +0.89%. The red two: industrials −1.41% and technology −1.38%. Global tech closed at 149.84 — ten cents above the 149.74 June high this letter named as the line from above. Financials spent a fifth week under the 134.55 August line, materials a seventh under the February line.

Was the sector week global, or one region carrying it? The house Sector Engine splits each sector into four regional legs. Technology rose in Europe (+4.0%) and developed Asia (+1.6%) and fell in America (−0.5%) and emerging markets (−2.5%) — Europe's tech leg is heavy in software, emerging markets' in Korean and Taiwanese chips. Staples rose in all four regions, health care in all four. The US-minus-Europe spread was positive in nine sectors of eleven, staples and utilities +3.4 points each — and technology −4.5, the one sector where Europe beat America this week.

The Global Compass

Regions: emerging over developed. VWO +0.34% against VEA −1.10% — a 1.4-point gap, with Latin America and China lifting the emerging basket while Korea and Taiwan pulled on it. China's large caps rose 3.2% as the mainland came back from Golden Week; its A-shares fell 0.4%.

Sectors: defensives over cyclicals in America. The engine's cyclical-minus-defensive spread was −2.9 points in the US (cyclicals +0.5%, defensives +3.5%), −2.0 in emerging markets, −0.1 in Europe and +0.2 in developed Asia. On the year the US spread is still +12.0 points. One week of defensives does not undo a year of cyclicals; it does show where the money went when the chips fell.

Sectors: the leaders' bench. Technology 149.84, ten cents above its line after a record close of 152.94 on Tuesday. Industrials 189.76, 8.3% under August. Financials 127.56, 6.9% under the September 3 record, five weeks under its line. Materials 109.08, 7.9% under the August 25 record, seven weeks under the February line.

Stay home vs go global — the US view. America won a fifth week: SPY +1.16%, VT +0.44%, VEU −0.75%. And now the year: +14.2% against +13.3% against +12.6%. Five weeks ago the world ex-US led by 4.5 points; today it trails by 1.6. The SPY/VEU ratio on the chart below has turned up from its September low and kept going.

Stay home vs go global — the Europe view: the core down, the edges up. In local terms: the STOXX 600 flat (+0.03%), the Euro Stoxx 50 −1.04%, the DAX −0.57% to 25,087, the CAC −1.33% to 7,792, Spain's IBEX −0.27% — and outside the euro the FTSE 100 +0.86% to 10,552 and Switzerland's SMI +0.93%. The dollar-listed Europe fund fell 0.41%, the euro-hedged one 0.74% — the hedged fund holds the euro area's exporters, the unhedged one also holds Britain and Switzerland, which rose. The French fund closed Thursday at 41.32, its lowest close in a year.

Europe split — the growth markets held. Poland +1.8%, Britain +0.7%, Switzerland +0.9% — against the Netherlands −1.8%, France −1.7%, Austria −3.1%. The Netherlands and Austria are Europe's chip-equipment and supplier markets, and they fell with the chips; the euro core fell with the euro. Last week both growth markets fell harder than the core; this week Poland rose against it. On the year: Poland +24.5%, the Netherlands +16.9%, Austria +14.1%, Britain +5.8%, Switzerland −0.4%, Germany −3.6%, France −7.7%.

Stay home vs go global — the Asia view: the corridor fell, the rest held. Korea: EWY −7.63%; the Kospi −5.4% to 6,626 by Thursday, the tech-heavy Kosdaq −0.1%. Taiwan: EWT −1.74% after Monday's record; the Taiex +1.7% to 49,313 by Thursday, after a record 49,823 on Tuesday — the local market up, the dollar fund down, because the fund traded a Friday on which Taipei was shut. Japan: the Nikkei +1.06% to 69,031, the TOPIX +0.34%, the dollar fund −1.07% as the yen weakened. India: the Sensex +0.78% to 72,472, after 71,593 on Thursday — another lowest close in a year — the dollar fund −1.05%. Hong Kong's Hang Seng rose 1.0%.

Stay tech vs go broad. This week broad won. The equal-weight S&P +1.58% against the S&P's +1.16% and the Nasdaq 100's +0.23%; the world +0.44% against global tech's −1.38%. On the year tech still leads by a distance — global tech +42.7% against the world's +13.3%.

Momentum vs defensive — defensive, clearly. International momentum fell 1.41% to 52.30; international min-vol rose 0.75% to 91.64; global min-vol +1.56%. On the year momentum still leads, +9.0% against +6.3%. Momentum outside America is heavy in the chip exporters; min-vol is staples, utilities and health care — the week in one pair.

One more pair: value edged growth. EAFE value −0.38% against growth −0.64%. On the year value leads +9.5% against +5.6%.

The Closelook letters — where this one sits. The house thesis, compressed: the stock market is a growing system at the aggregate level in which most constituents slowly fade while a small group massively outperforms — and that group changes dynamically; it never stays static. Own the aggregate, know the current winner group, watch for the rotation. This week showed a rotation inside the winner group, not out of it: from the AI builders to the AI sellers, from the chip countries to the market that sells software. This letter reads the map (regions, currencies, rates); Sunday's US letter reads the tape and its levels; Sunday evening's Hypergrowth letter reads the names.