U.S. Futures & World Markets

Happy Soul Train Friday! US equity futures are higher this morning after hitting fresh record intraday highs yesterday. Lower oil prices and declining Treasury yields have fed the rally, while tech stocks remain on fire. Dell is the standout this morning, up more than +33% premarket after reporting stellar earnings.

It's a quiet day on the economic calendar, though we will hear from several Fed speakers. KC Fed President Schmid said he wants a firm commitment from Fed officials to bring down inflation. Isn't that already part of the dual mandate?

BofA had a few striking statistics: the S&P 500 is at new highs but just 21 stocks (4% of the index) are making new highs — the same count as at the internet bubble top in March 2000. Emerging Market leadership is even more narrow, with just 2% of stocks at all-time highs. Back in the S&P, 222 stocks are trading more than 20% below their highs, and 109 are trading more than 40% below highs. A small group of stocks is carrying the market — globally. The big question is whether breadth begins to widen or leadership stays concentrated.

S&P Futures vs. Fair Value: +13.00  |  10-Year Yield: 4.45%

CORE Headlines

Charts & Data

Core PCE: mildest monthly gain in 5 months, but 3.8% annualized over 3 and 6 months. Nick Timiraos, WSJ via Daily Chartbook: "Core PCE prices rose 0.24% in April — the mildest month-over-month gain in five months. But the 3-month and 6-month annualized core PCE rate was 3.8%, and the 12-month change was 3.3%." Still sticky on the shorter-term measures the Fed watches most closely.

Personal savings rate at a 4-year low of 2.6%. Daily Chartbook: consumers are spending more and saving less. Supports near-term spending but reduces the buffer for a shock.

Q2 GDP tracking 3.8%. Augur Infinity via Daily Chartbook: the Atlanta Fed's GDPNow model estimate for Q2 GDP growth fell to 3.8% from 4.3% on May 21. Still strong — just off the recent peak.

Bull-Bear ratio at long-run average — neither extreme. Ed Yardeni via Daily Chartbook: "The Investors' Intelligence Bull/Bear ratio was 2.00 this past week, just above its 1.93 long-run average." A clean read given the recent run.

AAII bull-bear spread still negative at S&P all-time highs — classic wall of worry. AAII via Daily Chartbook: bullish responses ticked up but the spread remained negative for the second straight reading. Retail investors aren't buying the rally in surveys, even as they chase it in practice.

US households more invested in stocks than at the dot-com peak. Absolute Strategy Research via Daily Chartbook: "Families now have a higher proportion of their financial assets in the stock market than even at the top of the dot-com bubble in 2000."

54.8% of consumers expect stocks higher — from a contrarian perspective, that's bearish. Ed Yardeni via Daily Chartbook: "54.8% of consumers expect stock prices to be higher in 12 months, well above the long-run average of 35.5%." Extreme optimism in surveys has historically been a contra-indicator.

Retail trading volumes on pace to break the January 2021 meme-stock record. Scott Rubner, Citadel via Daily Chartbook: "Daily volumes on our cash platform are setting new highs and are on pace to finish nearly 10% above the previous record established during the January 2021 meme-stock era."

S&P up 15%+ in Q2 — best midterm Q2 ever, first to cross double digits. Brown Technical Insights via Daily Chartbook: "Midterm 2nd quarters are notoriously bearish, down nearly 3% on average and the only quarter of the Presidential Cycle with a negative average return."

This market is all about tech — globally. UBS via Daily Chartbook: "This market is all about tech. That goes for US as well as global markets."

New highs without breadth — 4th worst year on record for this divergence. Bespoke via Daily Chartbook: "This year already ranks tied for fourth in the number of days when the S&P 500 closed at a 52-week high but breadth was negative." The concentration risk is historically rare.

Semis dramatically overbought — unlikely to maintain leadership through mid-October. Jessica Rabe, DataTrek Research via Daily Chartbook: "History says Semis are dramatically overbought here and are unlikely to maintain leadership over the next 100 trading days, which takes us through mid-October, a historically choppy season."

Tech accounts for more than a quarter of S&P trailing net income — twice the dot-com share. Bespoke: "The Tech sector accounts for more than a quarter of trailing 12-month net income among S&P 500 members — almost exactly twice the share at the dot-com peak in Q1 2000." This time the earnings are real.

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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.