The risk-off move continues this morning. Although most pundits are attributing the sudden decline to Trump’s Comey woes, it feels like there is more going on.

If the market was truly solely worried about Trump’s missteps, then American assets would be leading the decline.

Yet during the past couple of days, European stocks have actually dragged US stocks lower.

Have a look at the chart of the Eurostoxx and S&P 500 over the past few days:

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Although the initial sell off on the news of the Comey memo caused US stocks to decline, the selling in America didn’t really accelerate until Eurostoxxs plunged. Even last night, spooz were hanging in there all evening long, until the Europeans came to work. Then we quickly gave up 10 handles.

So what’s going on?

Well, to some extent, this is just a continuation of the buy-the-rumor, sell-the-news Macron trade. It is now obvious that on election evening, all the good news was baked into European markets.

(Click on image to enlarge)

I was lucky enough to pitch my Eurostoxx long position going into the election, but too dumb to realize that these trades take longer to play out. Like a chump, I thought the dip after Macron’s win offered a compelling opportunity to get long.

The trouble is, so did everyone else.

Nowadays, the best way to decide which stock markets are most crowded is to look at which ones are hated the least. Have a look at this terrific chart posted by ZeroHedge that shows the percent of fund managers who think the various countries’ stock markets are overvalued.

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You can see that managers overwhelmingly believe US stocks to be overvalued, with European stocks offering an undervalued opportunity. The long and short of it is that the European Eurostoxx trade is crowded, while the US stock market has a relative under weighting.

The sell off of the past couple of days was an unwinding of this lopsided sentiment. That is why European stocks were leading on the downside even though the bad news was emanating out of America.

At a risk of looking like a fool, I am adding to my Eurostoxx position down here this morning. Longer term, these fund managers are correct in their assessment of the relative merits of the different countries’ future stock market returns. These past two days were just a correction in this longer term trade. A shake out of the weak holders. Let’s hope I am not too early, and end up getting eaten by the shorts who are pressing their trade.