U.S. Futures & World Markets
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Stocks are looking to build on yesterday's bullish momentum. Amazon is leading the charge higher, +13% premarket, after delivering stellar results in its AWS business. Apple is headed in the opposite direction, down 7% premarket, after an underwhelming earnings report failed to excite investors.
The market has remained surprisingly resilient in the face of multiple headwinds. The unwind in momentum stocks has been swift, but the bulls have managed to regain control. After a brutal deleveraging-driven unwind, the Kospi soared almost 18% on Friday, proving the AI-frenzy can move in both directions. When positioning gets stretched, markets can move faster than you can click "buy" or "sell."
CORE Headlines
- Iran launches attacks on strategic U.S. assets in Kuwait and Bahrain. — CNBC
- Saudi Arabia announced a maritime coalition to protect shipping in the Red Sea. — FT
- Amazon found "catastrophically expensive" cost overruns from AI mistakes. — FT
- President Trump says "Board of Peace reached a historic agreement for the complete disarmament of Hamas and all other armed groups in Gaza."
- U.S. economic growth slowed to 1.5% in Q2, weighed down by strong imports to fuel the AI boom. — WSJ
- Tesla executives told to prepare for a separation of the company's China business. — WSJ
- Mortgage rates jumped to their highest level in a year. — WSJ
Charts & Data
The S&P is down less than 1% in July (after a 1% drop in June) and about 2% from all-time highs. After a 16% rally in April/May, it has simply gone sideways for two months. Ryan Detrick: "Not really end of world stuff and our take is still we are in a bull market with new highs coming soon."
Amazon's AWS revenue over the last 12 months — $148 billion — was higher than the revenue of 474 companies in the S&P 500. Charlie Bilello: "Incredible."
US AI investment inched up to another record high, exceeding a $450B/yr pace for the first time — now the largest single category of US physical investment. @josephpolitano via Daily Chartbook: more than single-family homes, factories, and power plants combined.
Q3 GDPNow initial estimate: 5.0%. Augur Infinity via Daily Chartbook: a sharp acceleration from Q2's 1.5% that the market hasn't fully processed.
Retail net selling of Tech reached a record -$316M in a single day — the weakest 3-day reading in history at -$643M. Vanda Research via Daily Chartbook: retail has joined institutional sellers in the tech exodus.
Leveraged ETF deleveraging is ~85% complete — JPMorgan believes these flows should no longer be a major source of equity volatility. JPMorgan via Daily Chartbook: a key market structure overhang is clearing.
Bear Market Checklist: 0 out of 6 bearish signals. "Bear market warnings are everywhere. Except in the data." Grant Hawkridge via Daily Chartbook: the index is frustrating people, but the evidence still isn't confirming a bear market.
Momentum's worst 4-day stretch on record — the sector-neutral index decline was not limited to Tech/AI. BTIG via Daily Chartbook: the breadth of the momentum unwind is historically unprecedented.
Interesting Reads
- Scott Monaco on the hotel breakfast and the psychology of the free buffet — Read. I stayed at a Hampton Inn recently and I've never seen people more excited to make their own waffles.
- Patty McCormick: AI is Oil, Not God — Not Boring
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