U.S. Futures & World Markets

Happy Soul Train Friday! https://mcore.hopp.to/youtube362

This morning, semiconductor stocks are giving back their gains. Reports that the Trump Administration may ask OpenAI to delay the release of its latest model on security concerns has traders using that as an excuse to book profits. Also, Axios reported that OpenAI may delay its IPO to 2027. I'm sure we'll hear some excuse from Sam Altman on why it's better to wait.

Expect large trading volume and perhaps some heightened volatility around the closing bell today with the Russell rebalance flows taking over. This used to be a massively important day, but algorithmic trading has made the process much more efficient over the years. Still, it's something to keep an eye on.

Outside of tech, oil prices continue to slide. It was interesting to see the broader market perform better yesterday. Let's see if we get a rotation out of tech and into other sectors.

S&P Futures vs. Fair Value: -28.00  |  10-Year Yield: 4.38%

CORE Headlines

Charts & Data

Russell rebalance: 43 stocks moving from the small-cap Russell 2,000 to the large-cap Russell 1,000 after the close. Bespoke Investment Research: "The 25 largest stocks in the index are up 260% over the last year. Needless to say, the Russell 2K is going to look and act a lot different in the second half." A structural reset in the small-cap index that will create mechanical trading flows today.

Semis up 107% this year. Mag 7 down 8% because they're spending hundreds of billions on semis. And the market expects this capex cycle to continue indefinitely. Charlie Bilello: "Have I got that right?" The cleanest summary of the current paradox in tech: the picks-and-shovels trade is crushing the miners.

Mag 7 (MAGS) at new 1-year lows relative to the broader market (RSP). Daily Chartbook: the equal-weight S&P is quietly outperforming the Magnificent Seven — a breadth expansion signal hidden beneath the index surface.

Q1 GDP revised up to +2.1% from +1.6%. @kevrgordon via Daily Chartbook: a welcome upward revision that confirms the US economy was on firmer footing entering 2026 than initially thought.

Cyclical GDP climbing, but strength is narrow — housing construction in free-fall, business equipment carrying the whole basket. EPB Research via Daily Chartbook: "The strength is narrow." A bifurcated economy where AI capex is propping up the cyclical picture while traditional cyclicals lag.

Gas prices still 90 cents above pre-war levels. GasBuddy via Daily Chartbook: despite falling oil, consumers haven't fully felt the relief at the pump yet. The political pressure to see gas prices fall further remains intense.

Asset managers most bullish on the dollar since early 2025 — leveraged funds more mixed, suggesting dollar rally has room to run. Bespoke via Daily Chartbook: "Trend followers are not yet fully committed to dollar strength, and the current rally has room to run." Dollar strength is a tailwind for US equities on a relative basis.

S&P 500 denominated in gold turned sharply upward three months ago — a sign of growth driven by economic strength, not debasement. John Authers, Bloomberg via Daily Chartbook: "The value of the S&P 500 when denominated in gold, a classic indicator of confidence in whether growth is being driven by true economic strength or by debasement, turned upward in dramatic fashion three months ago." The real-terms equity rally is the most encouraging signal of the cycle.

Bitcoin in a 262-day drawdown — pales vs. three prior major bear markets. Bespoke via Daily Chartbook: "Bitcoin hasn't been at a new record high in about 9 months." Crypto continues to take a back seat to AI as the speculative vehicle of choice this cycle.

"It's different this time" crowd getting louder — not at peak euphoria yet, but the Kool-Aid is being poured. @markminervini via Daily Chartbook: advisor sentiment edging toward complacency. Worth monitoring as a contrarian indicator even if we're not at a top.

US levered ETF trading volume running 50% above 2025's record pace — ~$45 billion per day, turning over 30% of complex AUM. Goldman Sachs via Daily Chartbook: "So far this year, US-listed levered ETF trading volumes are running 50% higher than the first six months of 2025's record pace." The leverage embedded in this market is extraordinary and unprecedented.

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