The Morning Call
6/5/26
The
Market
Technical
Thursday in the
charts.
https://www.zerohedge.com/markets/stocks-mixed-amid-momo-meltdown-crude-crypto-slide
Summary:
Tech wrecked (after AVGO's AI outlook miss) which exacerbated momo's
meltdown, dragging Nasdaq to its biggest underperformance rel. to The Dow
in 17 months. Lower oil (Israel truce) pulled yields and the dollar
lower (allowing gold to rebound off key technical). Bitcoin
tracked tech into the abyss.Chips breaking bad...but dip-buyers
ever-ready... Profit-taking in AI-driven momentum names is a headwind for the S&P
500, yet Thursday’s strong breadth, new sector leadership, and a broader bid
for recent laggards suggests capital is rotating rather than leaving.
Thursday 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
The
bond market holds the key.
https://www.zerohedge.com/the-market-ear/bond-market-holds-key
Summary:
The bond market may be the most important market right now. Treasury yields are
sitting at a critical juncture, but to figure out the next move in rates, you
probably need to figure out oil first. Several equity relationships suggest
even modest moves in yields could have meaningful implications for valuations
and market breadth.
The first crack in
the AI mania?
https://www.zerohedge.com/the-market-ear/first-crack-ai-mania
Summary:
The world's most crowded AI trade just suffered one of its largest down days of
the year. KOSPI has become ground zero for the global AI mania, and history
suggests that when Korea starts wobbling, the rest of the AI complex often pays
attention. The uptrend remains intact for now, but markets rarely move in a
straight line when positioning becomes this extreme. The question is not
whether AI remains a powerful long-term theme. The question is whether
expectations have simply moved too far, too fast. It is becoming
increasingly difficult to find new superlatives for SK Hynix. The stock is
getting hit for nearly 10% overnight, a move that would have seemed unthinkable
just a few weeks ago. Despite the selloff, shares remain above the rising
21-day moving average, while the 50-day sits much lower.The bigger concern for
bulls is the number of upside gaps created during the parabolic advance.
Markets rarely leave that many gaps behind forever. We do not need to fill all
of them for this move to become painful. Even a partial retracement could inflict
significant damage on late arrivals who chased the rally higher.
Friday morning setup:
Futures are lower amid fresh underperformance of tech. If the premarket
weakness persists, the S&P 500 is set to break a historic weekly
run of gains as the AI trade takes another leg lower this time driven by the
cartoonish Kospi index, with investors also expecting payrolls
data to affirm that interest rates will stay higher for longer (full payrolls
preview here). As of 8:00am ET, S&P futures are down 0.5% while
Nasdaq futures slide 1% as chipmakers fall and big tech stocks are
lower too, following on from a slump in South Korea’s Kospi. All Mag 7
names are all lower in premarket trading except for MSFT (+0.4%); NVDA fell
-1.3%, a continuation of yesterday’s underperformance post AVGO earnings. On
news flow, headlines were mostly muted this morning; after yesterday’s non-tech
led rebound, we saw more negative sentiment this morning with all three indices
lower during the pre-market session. Bond yields are flat to lower, the 10Y
yield trading unchanged at 4.47% lower; the USD is also lower. WTI crude fell
-0.2% to $92.86; both base and precious metals are lower while the bitcoin
mauling shows no signs of ending.
Fundamental
Headlines
The
Economy
US
May
nonfarm payrolls grew by 172,000 versus forecasts of 85,000; the unemployment
was 4.3%, in line.
May average hourly earnings were up 0.3%, in line.
International
Q1 EU employment change
was up 0.1%, in line; the Q1 YoY GDP was down 0.2%
versus +0.1%.
April
Japanese household spending was up 1.6% versus predictions of +0.5%; April YoY average
cash earnings were up 3.5% versus +3.2%; the April leading economic indicators
came in at 115.9 versus 114.3.
Other
New homes at the upper range of
affordability.
https://politicalcalculations.blogspot.com/2026/06/new-homes-at-upper-threshold-of.html
Dwindling oil inventories are a warning.
Oil at
an inflection point.
https://giftarticle.ft.com/giftarticle/actions/redeem/d20b0f0f-77a9-48a1-bfde-2827a0e802c8
Jobless claims scream for lower unemployment rate.
https://bonddad.blogspot.com/2026/06/jobless-claims-virtually-screaming-for.html
More detail on Wednesday’s ISM services
report.
https://mishtalk.com/economics/ism-services-prices-up-108-straight-months-and-rising-faster/
Iran
Overnight news.
Waiting for the end.
https://www.powerlineblog.com/archives/2026/06/waiting-for-the-end-3.php
Monetary
Policy
A favorite theme of mine: the Fed never gets
it right.
Inflation
The
real trend in inflation since the lockdown.
(3)
Since Lockdowns, A 12% GDP Loss; Half Of US Dollar Purchasing Power Stolen
AI
AI models are having their iPhone moment.
https://om.co/2026/06/02/ai-models-are-having-their-iphone-moment-whats-next/
How much more software do we need?
https://www.noahpinion.blog/p/how-much-more-software-do-we-really
The AI investment boom sucks up hoarded cash
and sprays it into the economy.
Tariffs
The background on Trump’s latest tariffs.
Investing
May the deals be
with you.
https://www.zerohedge.com/the-market-ear/may-deals-be-you
Summary:
While economists debate recessions, elections and geopolitical flashpoints,
CEOs are busy doing something else entirely: buying companies. M&A volumes
are surging, deal announcements are piling up by the day, and animal spirits
are suddenly running the corporate world again.
Why the big tech
borrowing boom is reshaping the credit markets.
Selling
abstraction.
https://asteriskmag.com/issues/14/selling-abstraction
News on Stocks in Our Portfolios
What
I am reading today
The over
regulated and overtaxed real estate market.
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