U.S. Futures & World Markets

Equity futures are higher premarket as tech stocks — particularly semiconductor and memory names — rebound from yesterday's selloff. Yesterday's sell-off may have simply been investors getting nervous into Micron's earnings report after the bell tonight. It could also be another reminder of how leveraged ETF market structure can amplify moves in both directions. Either way, MU will be an important read-through on demand, though expectations are extremely elevated.

There are a few geopolitical developments to monitor. Oil prices are lower again on reports suggesting that Iran will not charge tolls for ships traversing the Strait of Hormuz. That said, Reuters reported the US and Iran remain in disagreement on the terms of nuclear inspections.

Here is an interesting seasonality stat from JPM: "Over the last 10 years, June has averaged a +1.85% return with a 90% hit rate (MTD, June is -1.4%). July has averaged +3.37% return with a 100% hit rate. The last 2 weeks of June tend to be weaker, and the first two weeks of July tend to be stronger." As always, seasonality is a tailwind, not a guarantee.

S&P Futures vs. Fair Value: +40.00  |  10-Year Yield: 4.47%

CORE Headlines

Charts & Data

The USD and S&P: could the 1990s analog be playing out again? JC Parets via Daily Chartbook: "During the second half of the 1990s, investors around the world wanted exposure to American assets — US stocks, US technology companies, dollars. Capital poured into the US and stocks and the dollar benefited together. Could something similar be happening today?" The parallel is striking.

Net capital inflows into US equities surged to a record $883.9 billion. Ed Yardeni via Daily Chartbook: "A record high that dwarfs anything seen in prior cycles and reflects the sheer scale of foreign conviction in the American earnings story." The world keeps voting for American exceptionalism with its capital.

Real yields going vertical — now at two-year highs. @tavicosta via Daily Chartbook: "This is exactly how you break an economy drowning in debt. The next Fed Chair has a lot of work to do, and that doesn't start with hiking rates." Rising real yields are the quiet threat to equity valuations.

No one invests in Treasuries anymore. Callum Thomas via Daily Chartbook: a chart showing Treasury allocations near historic lows despite yields at multi-year highs. The pain trade for bonds would be significant if investors ever rotate back.

Bitcoin ETF flows: no net positive day since mid-May — institutional demand absent at current prices. GlassNode via Daily Chartbook: "Since mid-May, the 7D-SMA of US Spot ETF aggregated flows has not recorded a single net positive day. TradFi capital has yet to re-engage with BTC at current price levels." Crypto is losing the capital allocation battle to AI equities.

Mega-cap tech and growth at near neutral positioning — cyclicals deeply underweight at 8th percentile. Deutsche Bank via Daily Chartbook: "Positioning in mega-cap growth and tech sits near neutral, while cyclicals remain deeply underweight. It would not take much positive news to trigger a sharp reversal." The rotation trade just needs a catalyst.

Materials positioning at the 0th percentile — the most extreme underweight in any sector. Deutsche Bank via Daily Chartbook: "From here, it would not take much to set off a sharp rebound." The most hated sector in the market is also the one with the most room to run if sentiment shifts.

Hedge funds using Mag 7 as the primary funder of the AI chase — net exposure collapsing. Goldman Sachs via Daily Chartbook: "MAG7 continues to be the main 'funder' of the AI chase. Nets have collapsed lately." Hedge funds are selling their biggest winners to buy the AI-adjacent names.

Taiwan margin debt surged 160% in 12 months — near an all-time high set just before the 2000 crash. Bloomberg via Daily Chartbook: "That surge in margin debt dwarfs the 50% increase recorded in the final 12 months of the bubble back then." The leverage story in Asia is alarming in historical context.

VIX call/put ratio at highest level of the year — demand for downside protection rising. Bloomberg via Daily Chartbook: "The open interest in the Cboe Volatility Index's call options relative to puts has climbed to its highest level of the year in a sign of increased demand for downside protection for the S&P 500." The hedging market is speaking.

Leveraged ETFs have created ~$9B of synthetic short-gamma for every 1% market move. Nomura via Daily Chartbook: "Leveraged ETFs have created an enormous synthetic short-gamma position, with dealer rebalancing estimated at roughly $9 billion for every 1% move in the underlying." This amplification mechanism works in both directions.

US has 40% top-10 concentration — but that's still among the three lowest in the world; only Japan and India have less. Michael Cembalest, JPMorgan via Daily Chartbook: a surprising global context for the concentration narrative. The US looks concentrated until you compare it to other major markets.

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This content does not constitute legal, tax, accounting, or other professional expert advice. Everything published is believed to be reliable, but its accuracy or completeness is not assured. Past performance does not indicate future results. The opinions expressed herein are subject to change without notice and are solely those of the author as of the date indicated.