Follow the Money,
Not the Headlines

U.S. Futures & World Markets

US equity futures are in positive territory as investors return from the long holiday weekend. Semiconductor stocks, and tech in general, look set to rebound after a volatile week. We've seen broadening out of this rally, with mega-cap tech and software stocks catching a bid, but it remains to be seen if this is just a trade or more of a genuine rotation.

SpaceX is mostly flat premarket as it gets set to join the Nasdaq 100 Index tomorrow. The index changed its rules specifically to allow SPCX in sooner than usual. With less than 5% of shares sold to the public on the IPO, SpaceX will have less than a 1% weight in the index — inclusion won't have much near-term effect on the stock. The bigger impact will be insiders looking to cash out as their lock-up periods expire over the next few months.

There are a couple of good charts below on investor sentiment and fund flows. While the AAII Sentiment Survey shows individual investors have become increasingly bearish on stocks, the AAII Allocation Survey shows these same investors are still plowing money into stocks. Another reminder to pay attention to what investors DO, not what they SAY.

CORE Headlines

• Shipping along the U.S. protected corridor in the Strait of Hormuz is seeing signs of recovering. — Bloomberg
• Iran and Oman submit proposal to charge administrative fees for transit through the Strait of Hormuz, similar to the model used in the Strait of Malacca and Singapore. — NBC
• Gulf carriers are considering the purchase of Boeing and Airbus jets. — Bloomberg
• Uber pauses most of planned food delivery expansion in Europe. — FT
• Judge orders the Pentagon to give Alibaba a reprieve from a lobbying ban. — Bloomberg
• Large institutional investors committing billions to private credit. — FT
• Netflix viewers are abandoning programs after the first season. — Bloomberg
• A year ago, the message from many business leaders was that AI was going to wipe out jobs — but the narrative has shifted to a future where workers keep their jobs and get a productivity boost. — WSJ
• The American steel industry is reaping the benefits of the AI data-center construction boom, but now warning of a high-stakes competition with their data-center customers for electricity. — WSJ
• After five years on the road, the average EV will still be able to drive up to 95% of its original range — better than many in the auto industry expected. — WSJ

Charts & Data

Home asking prices fell 2.5% YoY in June — steepest decline in Realtor.com data going back to 2017. Realtor.com via Daily Chartbook: a meaningful softening in listed prices even as transaction prices stay elevated.

Median US home-sale price hit a record high $408,800 in June. Dana Anderson, Redfin via Daily Chartbook: a striking divergence — asking prices are falling while actual sale prices reach records. Sellers are negotiating down, but buyers are still paying up for the right properties.

AAII bull-bear spread dropped the most in nearly 5 years, pushing back into negative territory. AAII via Daily Chartbook: individual investors say they're bearish — but they're still buying. Watch what they do, not what they say.

AAII stock allocation rose on the month despite negative bull-bear spread — highest since November 2025. AAII Asset Allocation Survey via Daily Chartbook: allocation to stocks increased while allocations to bonds and cash both declined. The gap between sentiment and behavior is historically wide.

Active managers sharply reduced equity exposure last week — second-largest week-over-week decline in a year. NAAIM Exposure Index via Daily Chartbook: the professional money has de-risked. The flipside: when they start to buy back in, it becomes a tailwind.

Hedge fund momentum exposure at 92nd percentile (5-year), 62nd percentile (1-year) — MTUM ETF +26% YTD. Goldman Sachs via Daily Chartbook: momentum remains highly concentrated in the prime book. When it unwinds, it tends to do so quickly.

Momentum and the AI trade have run too far, too fast — Datatrek. Datatrek Research via Daily Chartbook: "This data very clearly says that Momentum and, by extension, the 'chips and shovels' part of the AI trade has run too far, too fast." A mean-reversion signal worth watching closely into earnings season.

H1 2026: first time since H2 2022 that small caps beat large, foreign stocks led the US, and value outperformed growth. @ginamartinadams via Daily Chartbook: only the seventh such instance since 2000. A meaningful rotation signal that's showing up in the historical data.

Before last week's Russell reconstitution, the Russell 2000 had become increasingly correlated with the AI trade. Goldman Sachs via Daily Chartbook: the reconstitution reset this — the "new" Russell 2000 is a cleaner small-cap vehicle. Worth understanding how this changes what the index actually represents.

Q2 kicked off with a sharp rotation from Q1 winners to Q1 losers. Bespoke via Daily Chartbook: the pattern of rotating from winners to losers at quarter-turns has been a consistent feature of this market. Whether it continues is the key question for Q3.

22% of XLF components now overbought — 5-month high. Negative first 2 months, positive beyond — 70%+ 1-year win rate. SentimenTrader via Daily Chartbook: financials are technically stretched but historically that resolves higher, not lower, on a longer time horizon.

Semi stocks and the dot-com era: price peaked in March 2000, EPS kept rising into 2001. @renmacllc via Daily Chartbook: "Wait for EPS to miss or downward revisions to confirm a top, and you'll fly into the side of a mountain." The lesson: price action can be early; fundamentals lag.

Analysts have rarely been this bullish on S&P 500 earnings heading into Q2 — a level typically seen only after recessions or at the start of a new cycle. Deutsche Bank via Daily Chartbook: the bar is high heading into earnings season. That cuts both ways.

Q2 EPS estimates were revised up 3.4% during the quarter — most since Q2 2021. Tech led with +8.7%. John Butters, FactSet via Daily Chartbook: analysts typically cut estimates during the quarter. The upward revisions this time are historically unusual and set a high bar.

63 of 111 S&P companies issued positive Q2 guidance — highest since Q3 2021, driven almost entirely by Tech (44 companies, 70%). Datatrek Research via Daily Chartbook: another reminder that earnings ultimately drive stocks. The guidance picture looks strong heading in.

Russell 2000 EPS expected to grow at 2x the rate of the S&P 500 this year and next. Goldman Sachs via Daily Chartbook: the small-cap earnings story is compelling — and largely unappreciated by the market.

Interesting Reads

• Why Iran may find it difficult to clear its oil inventories even after sanctions relief — CNBC
• 15 Southern Beach Bars — Southern Living

Want this in your inbox every morning?

Morning Core subscribers get this analysis two days before it's published here — plus charts, data, and Nick's unfiltered take on the markets. It's free.