The Morning Call
6/10/26
The
Market
Technical
Tuesday in the
charts.
Summary:
Yesterday's dead-cat-bounce gave false hope that Friday's fracas was a blip.
On the back of no obvious (news/event/level) catalyst today saw tech
lead the charge lower in stocks, dragging bitcoin and gold with it.
Rotation was oft-cited in the downturn but dip-buyers stepped in to pull them
well 'off the lows' by the close. Bonds were relatively benign (along
with the dollar) as oil tumbled on yet another 'any day now'
peace deal comment from Trump. Friday we had 'good news' (from
jobs) and stocks tumbled... yesterday meh macro and stocks bounced...
today 'good news' (from housing) and stocks tumbled again? Is good
news really bad news again as signs of better economic growth are being
met by an expectation of higher rates. And higher rates put a strain on an
S&P 500 Index that is already trading at a P/E above 20X. This is the so-called
'growth-rates tango' and it comes as questions rise about AI's token party gets
'roofied' prompting a puke... A relative news vacuum left
investors continuing to assess how much exuberance may be in markets that are
facing the potential three headwinds of:
1.
a spike
in equity issuance,
2.
tighter
monetary policy,
3.
and a
corresponding slowdown in growth.
Tuesday 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
Goldman, Barclay’s
traders warn of Market risk.
The VIX is the
last to know.
https://talkmarkets.com/article/the-fear-gauge-everyone-watches-is-the-last-to-know-1781027560
Wednesday morning
setup: Markets continue to trade with a risk-off bias this morning, with equity
futures and macro credit weaker, rates selling across the curve, as the USD and
oil sensitive currencies outperform. It’s set to be another ugly day for
US tech stocks as US equity futures slide ahead of today's CPI print
which will see headline inflation rise above 4% for the first time in 3 years (full
preview here). As of 8:00am Nasdaq 100 futures are down 1.5%
versus losses of 1.0% for the S&P 500 contracts. Pre-market, Mag 7 are all
lower with NVDA (-1.9%), TSLA (-1.6%) and MSFT (-1.3%) being the biggest
underperformers. Oracle trades lower by 2.8% in the premarket ahead of its
after-hours earnings, which could provide the next catalyst for the AI trade. Bond
yields are 1-2bp higher across the curve amid hotter-than-expected Japan PPI
print last night. Commodities are mixed: oil swung from losses to gains after
Trump said Iran “will have to pay the price” for taking too long to
negotiate a deal. The threat followed a round of retaliatory
attacks between the two sides, with Tehran saying it’s reviewing the
diplomatic process. Brent rose 1.7% to around $93 a barrel. Treasury
yields climbed across the curve, with the 10-year rate up three basis points to
4.54%. The dollar held steady; precious metals are all lower. Geopolitical
headlines remain volatile - Trump warning that "Iran will have to pay the
price for taking too long" and threatening he is close to ordering new
strikes - but this was unlikely to have triggered the rotation given 1) Oil
& Rates traded lower yesterday; 2) Tech has been the escalation trade. US
economic data calendar includes May CPI (8:30am) and federal budget balance
(2pm)
Fundamental
Headlines
The
Economy
US
Weekly mortgage
applications were up 10.8% while purchase applications were up 7.3%.
May existing home sales
rose 3.2% versus forecasts of up 0.5%.
https://bonddad.blogspot.com/2026/06/existing-home-sales-report-shows-sub.html
May
CPI was up 0.5%, in line; core CPI was up 0.2% versus +0.3%.
https://www.zerohedge.com/markets/americans-real-wages-are-shrinking-cpi-tops-4-first-time-3-years
International
May
Japanese PPI was up 0.9% versus estimates of +0.5%.
May Chinese CPI fell 0.1% versus projections
of -0.2%.
Other
Parsing what is ‘middle class’.
Despite all the turmoil, the economic numbers
look fairly normal.
https://alhambrapartners.com/monthly-macro-monitor-nothing-to-see-here/?src=news
The rush to restock oil inventories will keep
prices higher for longer.
Five macro charts to watch.
https://talkmarkets.com/article/5-macro-charts-watch-these-signals-now-1781005701
The oil market defies predictions of summer
crunch.
https://giftarticle.ft.com/giftarticle/actions/redeem/75c30073-9da5-42dd-b96d-965ecb7f8e63
Iran
Overnight news.
Trump slammed Iran for not reaching a
quick peace deal with the US after a night of attacks that have strained a
fragile two-month truce. “They’ve taken too long to negotiate a deal that would
have been great for them, now they will have to pay the price,”
Trump wrote on Truth Social
Trump still thinks a peace deal with Iran is
on the horizon, even as the United States launched retaliatory strikes on Iran
Tuesday evening, a senior White House official said Tuesday.
It would be "unwise" to assume that
the situation in the Strait of Hormuz will return to how it was before the Iran
war, the head of French shipping group CMA CGM said on Tuesday. CMA CGM, the
world's third-largest container line, is among firms with vessels stranded
inside the Gulf since the start of the conflict that has virtually closed the
waterway, which carries a fifth of global oil and LNG supply.
Monetary
Policy
The Treasury market is telling Warsh that
rates need to be higher.
The Fed has a problem and the Market knows it.
Fiscal
Policy
A financial disaster is looming.
https://www.washingtonpost.com/opinions/2026/06/05/bring-back-calls-deficit-reduction/
A bipartisan summit is the best way to address
the deficit.
https://thehill.com/opinion/congress-blog/economy-budget/5910316-deficit-reduction-fiscal-summit/
AI
Waiting for AI to trickle down.
https://www.apollo.com/wealth/the-daily-spark/still-waiting-for-ai-to-trickle-down
What if consumers hate AI generated content?
Too much of a good thing?
Summary:
If AI proves significantly more expensive to deploy than initially
anticipated, adoption may increasingly be constrained by price. As the cost of
inference and agentic workflows becomes clearer, firms are likely to become
more selective about where they deploy AI capital, particularly if returns on
investment prove less compelling than current expectations suggest. To
be clear, revenue growth across the AI ecosystem is real and substantial.
Anthropic’s ARR is reportedly approaching
$50bn, while Dell’s AI server revenues have
increased more than 750% YoY. This is not a sector that can be dismissed as a
purely speculative bubble; the earnings are already material. The
question is whether current revenue trajectories can sustain the expectations
embedded in valuations once we move beyond the phase where every management
team feels compelled to have an AI strategy, budget, and narrative. There
are already tentative signs that cost is becoming a more important
consideration. Large enterprises are beginning to scrutinize AI spending more
closely, reports of unexpectedly large token bills are becoming more common,
and several industry anecdotes suggest
that enthusiasm for agentic workflows may not always survive contact with the
economics. Whether these examples prove significant remains to be seen, but
they point to a question that markets have not yet fully grappled with.
Investing
Which analysts add
value?
https://klementoninvesting.substack.com/p/which-analysts-add-value
The problem with
SpaceX.
https://www.riskhedge.com/outplacement/my-problem-with-spacex
The growth of
blockchain.
Treasuries sink while
riskier debt rallies.
https://www.capitalspectator.com/safe-havens-no-more-treasuries-sink-while-riskier-debt-rallies/
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