The Morning Call
7/16/26
The
Market
Technical
Wednesday in the
charts.
Summary:
The rotation from Memory (winners) into MegaCaps continued
today (AAPL, CRWV, & SPCX as potential catalysts) leaving broad equity
markets rangebound (but Nasdaq rescued by 0-DTE Put covering).
Rate-hike odds, yields, and the dollar fell on cool PPI (and lower oil). Bitcoin
was bid while bullion did nothing. ...and all amid slow summer
liquidity. Rate-hike odds tumbled again today after PPI confirmed
CPI's coolness as Energy deflation drags down headline inflation and core price
gains slow. Today's print basically takes a July hike off the table but leaves
September in play (though now less than coin-flip)...
A rangebound session for the
S&P 500 (one of the lowest ranges of year)...
...amid
what Goldman called "incredibly quiet volumes" (down
-11% vs. the 10dma), with their floor tilting 5.5% better for sale with
HFs as large net sellers and LOs slightly better to buy
- HFs are -15% better for sale, which ranks
in the 98th %-ile over the last yr. Supply across Tech and Comms
Svcs comprise most of their sell skew, while demand in HCare and Fins is
muted
- LOs are slightly better to buy and look
quite the opposite from HFs. LOs are net to buy Tech and Comms Svcs,
while selling Cons Disc and HCare
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
Thursday morning
setup: Futures are lower, erasing much of yesterday's gain with both Nasdaq and
Rusell lagging SPX, following a continued rollercoaster in Korea where stocks
tumbled after the BOK hired rates for the first time in 3 years. As of 8:15am
ET, S&P futures dropped 0.3%, while Nasdaq 100 contracts dropped 0.8%. In
premarket trading, semis are weaker again while Mag7 is stronger (AMZN, GOOG,
META, and MSFT all up are least 1.2%) with the market having "a defensive
tilt as the AI theme is poised to move lower" per JPM. A strong
earnings beat and raised sales outlook from TSMC failed to trigger fresh gains
for the sector that has fueled most of this year’s stock market gains. Europe’s
Stoxx 600 was down 0.6%. WTI trading in a tighter range into Trump’s speech, AI
/ Semis are driving mkts with TSM ADRs indicated -3.5% their print may not be
enough to buoy the group. Korea moves to tighten rules around levered ETFs, so
more near-term downside may ensue. US to set 25% tariff for Brazil on July 22,
ex-beef / coffee / ethanol products. Pre-mkt, bond yields are +2bp with USD
flat. Commodities are lower across all 3 complexes though base metals are bid.
Today’s macro data focus is on Retail Sales where a stronger print may pull
some inflows into consumer-related segments, which still have light
positioning.
Fundamental
Headlines
The
Economy
US
Weekly jobless claims totaled 208,000 versus
consensus of 217,000.
June retail sales were
up 0.2%, in line; ex autos, they were down 0.2%
versus -0.1%.
The
July Philadelphia Fed manufacturing index came in at 41.4 versus estimates of
13.0.
International
The May
EU trade balance was -E7.8 billion versus expectations of +E1.6 billion.
May UK GDP grew
0.1%, in line; May industrial production fell 0.5%
versus -0.1%; the May trade balance was
-L1.04 billion versus -L3.9 billion; the May
YoY construction output was down 1.8% versus -1.1%.
Other
Update from Ed Yardini.
Overnight
News
South Korea’s
central bank raised interest rates for the first time in over three years,
joining its global peers to tighten policy in the face of inflation fueled by
the U.S.-Iran conflict. Bank of Korea Gov. Shin Hyun-song said that the bank
would tighten policy further in coming months, citing stronger-than-expected
economic growth and inflation.
Iran
Where is this all going?
https://www.zerohedge.com/geopolitical/alastair-crooke-iran-war-30
More not so positive analysis.
Monetary
Policy
Warsh and his star studded task force.
https://mrzepczynski.blogspot.com/2026/07/warsh-and-star-studded-task-forces.html
Latest Beige Book noted improved economic
activity in 11 of 12 districts.
Inflation
PPI
declines are less good than CPI declines.
https://bonddad.blogspot.com/2026/07/producer-price-declines-are-less-good.html
Ordinary folks’ CPI.
https://econbrowser.com/archives/2026/07/real-wages-in-june
Utilities requesting 26% increase in rate
hikes.
https://www.zerohedge.com/markets/us-utilities-requested-92bn-rate-hikes-q2-26-previous-year
AI
Goldman warns of risks in massive hyperscalers’
bond issuance.
Summary:
Hyperscalers are issuing record amounts of debt to fund their CapEx needs,
which have been revised upward in recent quarters (as FCF goes negative)...
As
Goldman's Spencer Rogers explains in his latest note (discussing the
credit/equity divergence and available here for pro subs), this
transition to a
higher-supply environment has weighed on credit technicals and increased
dispersion, fundamentally altering the beta relationship between the two
markets. Credit is also, by design, less exposed to upside
convexity vs. its equity market peer.
In fact, signs of Hyperscaler credit
stress (measured by the spread over US Treasuries) has reached the highest since
Goldman Sachs launched the basket in February.
Biswas's
conclusion is more ominous, noting that the current backdrop of healthy all-in
IG yields and relatively benign default outlook probably represents the
peak of the strength in credit inflows. The risks from here are clearly
skewed towards the downside for credit inflows if rates rally and/or
sentiment with regards to credit deteriorates.
The
Financial System
Why high credit card delinquencies aren’t
showing up at the banks.
Investing
The latest from John Hussman.
https://www.advisorperspectives.com/commentaries/2026/07/15/mountain-cliff-ocean
A perilous summer
for stocks?
https://giftarticle.ft.com/giftarticle/actions/redeem/62670203-bdce-4bbb-8585-a93d6647f7bf
Stock buybacks
remain high but what are insiders doing?
Headwinds and
tailwinds.
https://talkmarkets.com/article/headwinds-and-tailwinds-minding-the-market-weather-1784114670
The outlook for
S&P dividends.
https://politicalcalculations.blogspot.com/2026/07/the-outlook-for-s-500-dividends-in-july.html
The war, inflation
and the yield premium.
Global interest
rates continue their broad ascent.
https://talkmarkets.com/article/rising-rates-1784130778
News on Stocks in Our Portfolios
What
I am reading today
The
hedonic treadmill.
https://seths.blog/2026/07/the-hedonic-treadmill/
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for Survival’s website (http://investingforsurvival.com/home)
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