The Trend Is Your Friend,
Quad Witch

U.S. Futures & World Markets

With the market closed tomorrow for Juneteenth, Happy Soul Train Thursday! https://mcore.hopp.to/youtube359

Stocks are higher premarket as we head into a three-day weekend. Investors booked some profits yesterday after new Fed Chair Warsh delivered fairly hawkish comments in his first press conference, but futures are bouncing this morning after the US and Iran officially signed a memo outlining terms of a peace agreement. The tougher negotiations still lie ahead, with both sides expected to hammer out details over the next 60 days.

Today also brings a massive options expiration with quadruple witching. Scott Rubner of Citadel: options open interest is at all-time highs, and 28% of all listed options are set to expire — the largest options expiration event in history. An astounding ~$8.3 trillion of US options exposure will roll off, 18% larger than the previous record set in December (~$7.1 trillion).

As a reminder: today roughly 18 cents of every dollar allocated to the S&P 500 goes to semiconductor companies, 33 cents flows into the Mag 7, and nearly 40 cents is concentrated in the index's ten largest holdings. Concentration has never been higher.

CORE Headlines

• President Trump signs peace deal with Iran. — Bloomberg
• Samsung sees growing fab demand from Alphabet, AMD, and others. — Nikkei
• President Trump confirmed Apple will work with Intel to design and build chips in America.
• Fed officials signaled that their next move may be to raise interest rates, not cut them — a striking reversal at Warsh's first meeting and a sign of how sharply the inflation outlook has turned. — WSJ
• Apple plans to raise prices on its products to offset the surging costs of memory and storage. — WSJ
• Elon Musk boosted his voting power in Tesla to 20% by turning stock options into immediately votable shares not sellable until 2028. — WSJ
• Allbirds is changing its name to Smartbird and pivoting from a shoe company to artificial intelligence. — WSJ
• Microsoft has built a massive business in China selling AI models, especially from OpenAI. — Bloomberg
• Many think Musk will eventually merge SpaceX with Tesla — and there's not much shareholders could do to stop him. — NYT

Charts & Data

T-bills now almost 85% of gross Treasury issuance — near highest share in over two decades. Torsten Slok, Apollo: "By tilting issuance toward short-dated debt, the government ties its borrowing costs more closely to the front end of the curve, making its financing increasingly dependent on Fed policy."

Q2 GDP tracking 3.0%. Augur Infinity via Daily Chartbook: the Atlanta Fed's GDPNow model improved to 3.0% from 2.8%. Solid growth continues despite the energy shock and rate uncertainty.

10/2-year yield spread narrowed sharply — flattest since April 2025. Daily Chartbook: the curve flattening signals the market is pricing in a more hawkish Fed. If Warsh is worried about inflation, the bond market is singing a different tune.

Real rates spiking on the FOMC release — Fed may be behind on easing. Tyler Neville via Daily Chartbook: "Nominal rates are rising as inflation is falling. The dollar breaking out could unwind the carry trade too. They'll have to reverse course hard." A contrarian take worth watching.

Market becoming less defensive — offense vs. defense spread back above zero. Andrew Thrasher, Thrasher Analytics via Daily Chartbook: the rotation back toward cyclicals and growth from defensive sectors is a positive bull market signal.

38% of S&P 500 Financial stocks hit 63-day highs Monday — strongest reading in six months. Dean Christians, Turning Point Market Research: "While financials do not need to lead a bull market, the broader market backdrop is typically more favorable when the sector participates." Breadth expansion confirmed.

Retail cash volumes tracking 9% above May's record — 9 of 10 largest retail trading days ever in the last month. Scott Rubner, Citadel via Daily Chartbook: "New records are being set almost weekly." The retail participation story has no historical precedent.

Cost of 10% downside protection at lowest in over a year relative to upside calls. Jess Menton, Bloomberg via Daily Chartbook: cheap insurance in a frothy market is a feature that should be used, not ignored.

Average S&P sector correlations at extreme lows — comparable only to mid-2024 before the Nikkei correction. Datatrek Research: low correlations reflect sector dispersion — healthy, but a macro shock could push them rapidly toward 1.0.

Current Nasdaq run mirrors the mid-1990s analog — remarkably. Datatrek Research: a chart that puts the AI-era rally in historical context. If the analog holds, this could be the early innings of an even longer run.

S&P 500 10-week MA above 40-week MA for 52 consecutive weeks. Grant Hawkridge, The Daily Number via Daily Chartbook: "Until that changes, the trend deserves the benefit of the doubt." The bull market's most durable technical signal remains intact.

Interesting Reads

• Economists on Fable 5 — X
• Can the shingles vaccine help prevent dementia? — Eric Topol
• A surveillance drone the size of a mosquito? — X

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