U.S. Futures & World Markets

Stocks are higher premarket as the market looks to bounce back from last week's selloff. Semiconductor weakness dragged the S&P 500 down 2%, while the S&P Equal-Weight Index gained 1.6%. That's a pretty clear sign that money is rotating into other areas of the market rather than heading for the exits altogether.

Geopolitical headlines were flying this weekend, along with ballistic missiles, but the market is shaking off the news. Fresh talks between the US and Iran are set for tomorrow, but the market is already in a deal.

Flows continue to drive this tape, as seen by the relentless selling in semiconductor names over the last week. Per Goldman Prime Brokerage data: "the largest net selling in global equities were sold for a second straight week — at the fastest pace since Liberation Day, and US Info Tech saw its largest net selling in over a decade. Semis were at the center of it, with eight consecutive sessions of net selling and more than half of US Tech outflows coming from Semi Equipment stocks."

The big question is whether this is a positioning reset after a massive run, or if the market is finally rethinking the AI trade. The overall story may not have changed — earnings remain strong and companies are still spending aggressively on AI — but there are plenty of changes happening underneath the surface. Market leadership is shifting, and that is something we should pay attention to.

S&P Futures vs. Fair Value: +54.00  |  10-Year Yield: 4.39%

CORE Headlines

Charts & Data

"China is fine." ZeroHedge: a tongue-in-cheek chart that made the rounds over the weekend — worth a laugh before getting into the more serious data.

US consumer activity strong: OpenTable reservations surging YoY, strong box office numbers. Mike Zaccardi, BofA via Augur Infinity: a healthy read on discretionary consumer spending even amid market volatility.

A record 33% of household wealth now held by Americans 70 and older. Charlie Bilello: a striking demographic data point with long-run implications for spending, savings, and capital markets.

Tokenized real-world asset market nears $32 billion — Treasuries and private credit are 66% of it. Torsten Slok, Apollo: "highlighting increasing institutional adoption of blockchain-based asset infrastructure." A quietly growing corner of the market.

Mag-7 down 14% from its May 14 peak while ex-Mag-7 is up 5% over the same period — the "Lag-7." Callum Thomas via Daily Chartbook: the divergence between former leaders and the rest of the market has widened sharply, though Friday showed a tick-up from oversold levels.

Mag-7 has fallen significantly behind the Nasdaq-100 — bullish rotation, oversold conditions, or a warning sign? Callum Thomas: "If the former leaders of the big tech-led bull market are coming undone, that's a pretty significant warning sign" — but also sets up potential for a rebound rally.

The case for value over growth is building as Mag 7 earnings growth converges toward the S&P 493. Torsten Slok, Apollo: "The decade-long case for growth rested on the Mag 7 out-earning everything else. With earnings growth converging and their valuation premium compressing, the setup increasingly favors value over growth."

Hormuz tanker traffic recovering but still below pre-collapse levels. @m_mcdonough via Daily Chartbook: "Activity has clearly moved off the lows, but the rebound is still modest versus the 50-80 tanker-crossing range seen earlier in the year."

Hedge funds raised tech exposure toward 5-year highs even as Mag 7 positioning hit a 1-year low. Goldman Sachs via Daily Chartbook: a striking divergence — funds are rotating within tech, favoring the broader complex over the seven largest names.

Retail rotated $12B out of gold and Bitcoin into $20B+ of semis ETF inflows this year. Simon White, Bloomberg via Daily Chartbook: "It's not too much of a leap to suggest some funds have hopped from the old shiny thing of gold to the new one of semiconductors."

Leadership is expanding — small caps beginning to outperform large caps, value beginning to outperform growth. Grant Hawkridge via Daily Chartbook: "Large caps can still do well. Growth stocks can still make new highs. But they are no longer the only game in town." The healthiest sign for the bull market in months.

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