The Morning Call
6/25/26
The
Market
Technical
Wednesday in the
charts.
Summary:
A small rebound in Korea sparked a knee-jerk bid in US
equities at the cash open, buoyed by tumbling oil prices. But the bounce
died around the EU close with Nasdaq leading the charge lower into MU
EPS. The dollar continues to surge, weighing on precious metals
and bitcoin was triple-fisted by tech's pain, MSTR perp's
collapse, and the greenback's gain. A lot of volatility today across all
markets amidst a backdrop of falling rates alongside a very weak May
New Home Sales report and an ongoing decline in oil prices as the
Strait of Hormuz continues to reopen to shipping traffic.Rates markets were
perhaps the standout mover today, starting to play catch-down to oil's recent
declines, but equities remain in a world of their own (the wrong way this
time)...
Wednesday in the
technical stats.
https://www.barchart.com/stocks/momentum
https://www.barchart.com/stocks/market-performance
https://www.barchart.com/stocks/sectors/rankings
https://www.barchart.com/stocks/signals/new-recommendations
Is this sell off a
healthy sign?
Counterpoint.
The latest from
Goldman’s flows guru.
Summary:
it is important to note that investor sentiment remains relatively balanced
even as portfolios become increasingly levered to the AI trade. AAII US
Investor Sentiment Bullish Readings Index currently sits at 36 (below ytd
avg and well off ytd high)... Additionally, Goldman’s
US Equity Sentiment Indicator stands at +0.3, the lowest level since
early April... The stock market absorbed >$115b of paper in less than a 2 week
period without blinking. The retail community has been a consistent
buyer of stocks all year – and SpaceX appears to have accelerated the retail
bid. My gut is this trend continues over the remainder of the year. Market
Tailwind.On the retail point, 33b shares traded across all US equity exchanges
last Thursday (6/18 - rebal + SPCX) which was good for the most
shares traded on a single day in the history of the US stock market
(breaking previous record of 30b shares on 4/9/25 AKA Liberation Day).Russell
Rebal this Friday (6/26) will also be an explosive trading volume session.
Buckle Up.There is a noteworthy technical market headwind early next week
as we estimate -$30b of US equities for sale attached to quarter end pension
rebalancing. $30bn to sell ranks in the 89th percentile amongst all buy and
sell estimates in absolute dollar value over the past three years and in the
95th percentile going back to Jan 2000.Heading into SPCX there were concerns
that the long only community would sell sleeves of their portfolios to make
room for new paper.On our trading desk we did not see noteworthy funding
trades from assets managers or SWFs. We saw some trading around the edges but
there was no palpable scramble to raise cash ahead of the deal. MFs are
currently sitting on ~$170b of cash which is inline with their historical
average (from a notional perspective). There is still plenty of dry powder out
there. Yes, even after record deals from GOOGL and SPCX.
Gold isn’t trading
like gold anymore.
https://www.zerohedge.com/the-market-ear/gold-isnt-trading-gold-anymore
Thursday morning
setup: Global stocks and S&P futures are higher while Nasdaq futures are on
a tear after Micron’s sales forecast blew the lights out, brushing aside
fears over a near-term pullback in the AI trade, while Qualcomm set
aggressive targets at its investor day in New York. As of 8:00am ET, a revival
of the AI demand theme is sending contracts on the Nasdaq 100 up 2.1% while
S&P 500 futures are up a more modest 0.7%. MU is +18% pre-market, pushing
Semis higher (SOXX +5%, DRAM +12%) while Mag7 - the companies which
enable all this chip spending - are mostly lower. As Goldman's Delta 1
desks asks, how much longer will they be willing to see their stock languish
while funding semiconductor outperformance? Korea's KOSPI rallied 5.5%
overnight (closing well off the highs) and remains ~2.4% below pre-Flash Crash
levels. While the AI theme is bid pre-market, this is not an ‘Everything Rally’
with Cyclicals seeing a mixed performance with Banks flat, Regional
Banks lower, Energy down with crude, Discretionary mixed, and Materials
flat. Within Defensives, Staples are weaker, HC mixed, and AI-related
Utils names are higher. Brent crude dropped 1.4% to below $73 a barrel, erasing
all Iran war gains, on fears of a supply glut following a ramp-up in
flows through the Strait of Hormuz. Bond yields are flat to +2bp as the yield
curve steepens, but the USD starts the session lower for the first time in 6
sessions. US economic data calendar includes May personal income/spending, 1Q
GDP revision, May durable goods orders, weekly jobless claims and May Chicago
Fed national activity index (8:30am) and June Kansas City Fed manufacturing
activity (11am). Fed speaker slate includes Bowman (8:45am), Goolsbee
(2pm, 6:30pm) and Williams (3:40pm).
Fundamental
Headlines
The
Economy
US
Q1 (final) GDP growth was
+2.1% versus estimates of 1.6%.
Weekly jobless claims totaled 215,000 versus predictions
of 225,000.
May
new home sales fell 7.3% versus consensus of +2.9%; May building
permits declined 0.9% versus -0.7%.
https://bonddad.blogspot.com/2026/06/may-new-home-sales-another-poor-month.html
May PCE index was +0.4%
versus expectations of +0.5%; the core PCE index was up 0.3%, in line.
May
durable goods order fell 4.5%, in line; ex transportation
they were up 1.3% versus forecasts of +0.6%.
May personal income rose 0.7% versus projections of +0.4%; personal
spending was up 0.7% versus +0.1%.
The May Chicago national activity index was reported at -0.1 versus
estimates of +0.12.
International
The April Japanese
leading economic indicators came in at 116.1 versus predictions of 115.9.
The July German consumer
confidence index was -29.2 versus consensus of -27.1.
Other
Overnight
News
Brent erased its
wartime gains as flows through the Strait of Hormuz accelerated. But tensions
remained as Donald Trump warned that tolls in the waterway are a red line issue
in negotiations with Iran.
Iraq will consider
all available options if its OPEC quota is not significantly increased and has
weighed leaving the producer group, sources with knowledge of Iraqi oil policy
told Reuters. The prospect of OPEC's second-largest producer considering an
exit would be a further blow to the group after the departure this year of the
United Arab Emirates. Iraq is one of the five founding members of OPEC, which
was formed in the Iraqi capital.
The BOJ needs to
raise interest rates every few months toward a neutral level of around 2%,
board member Naoki Tamura said.
The EU’s trade
deal with the US is set to go into effect after the bloc gave its final
sign-off ahead of Trump’s deadline. BBG
Iran
There is no agreement on the issue of tolls.
Paying Iran to open the Strait of Hormuz.
https://www.powerlineblog.com/archives/2026/06/easy-mullah.php
Hormuz closure strands 1200 cargo ships.
https://www.ft.com/content/4d3dd2b7-cb6b-410b-8c15-203904f32294?syn-25a6b1a6=1
Summary:
The closure of the Strait of Hormuz has stranded more than 1,200 cargo ships
carrying goods worth an estimated $125bn, according to new data, demonstrating
the vulnerability of global commerce to a handful of strategic maritime
chokepoints. Please use the sharing Justus Heinrich, head of marine
underwriting at Allianz, told the FT the closure of the strait had changed the
perception of risk in chokepoints for insurers. “We were always talking about
realistic disaster scenarios, and now we have a real disaster scenario like
this one,” he said. “So I think it changes a bit the perception of actual
operational risks from ‘it can theoretically happen’ to what we know now out of
this situation.”
Oil tanker rates soar.
Monetary
Policy
Is
Warsh really a hawk? M2 says no.
https://www.zerohedge.com/the-market-ear/liquidity-crime-scene-follow-money
Summary.
We are currently seeing the fastest growth in US money supply in four years. The
Fed’s balance sheet rose +$11 billion in the week ending June 17th, to $6.74
trillion, the highest since March 2025. Total assets have risen +$162.8 billion
since the start of the year.
The
Financial System
Hedge fund shorting private credit.
Summary: Hedge fund
manager Lee Robinson is shorting insurers, including Lincoln National Corp. and
MetLife Inc., due to their exposure to private credit. Robinson's firm, Altana,
is launching a new fund to protect against a potential downturn in private
credit and its impact on corporate valuations. Insurers' exposure to private
credit has grown significantly over the last decade, with a fifth of the US
life insurance sector's fixed-income holdings allocated to illiquid assets,
mostly private credit, at the end of 2025.
The stocks of private equity/debt managers are
starting to crack.
https://talkmarkets.com/article/alts-continue-to-struggle-1782324910
Investing
Six investment lessons
from a successful fund manager.
https://www.morningstar.com/funds/6-investment-lessons-will-danoff-fidelity-contrafund
Nine lessons from
Jesse Livermore.
https://www.zerohedge.com/markets/jesse-livermore-old-lessons-todays-markets
The cost of
rolling a pretax retirement fund into a Roth IRA.
https://politicalcalculations.blogspot.com/2026/06/the-cost-of-rolling-pre-tax-retirement.html
How to survive the
wrong turns in life and the Market.
https://www.safalniveshak.com/how-to-survive-the-wrong-turns-in-life-and-the-markets/
Warsh hammers
gold.
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