So we get this big technical break, and Amazon is now down 14% from the highs.

Again, as we’ve discussed here in my daily note many times, at a trillion dollar valuation, the market was pricing Amazon like a monopoly that would go unchecked, and allowed to destroy any and all industries in its path.

But Trump has made it clear that he’s not going to let it happen.  Amazon, Facebook and Google have all been subject to Trump threats to rein them in through regulation — to level the playing field for their competition.  And if there’s one thing we know about Trump, as the President: he will follow through on threats, and he likes a good fight.

With that, the FANG (Facebook, Amazon, Netflix, Google) trade, after being UP as much as 50% this year (as an equal weighted group), isfinally breaking down.  And that is creating some shock waves in broader markets.

So, is this the beginning of a bigger global meltdown or will it ultimately be a repricing of the tech giants.  I think the latter.

Remember, the tech heavy Nasdaq, for much of the year, performed with near impunity from any geopolitical turmoil.  As trade rhetoric heightened, the Dow would suffer, while the Nasdaq continued to climb.  At one point this summer, the Nasdaq was up double-digits on the year, while the Dow was down.

So this is more likely a rebalancing (the rotation from tech giants to value stocks).

As we go into third quarter earnings, we continue to run at 20% earnings growth on the year.  The P/E for stocks remains low, in a low/accommodative interest rate environment (yes, 3.2% 10-year yield remains low relative to history).  And the economy is hot, with low and stable inflation.

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