Next week's Nasdaq index rebalancing may reshape the position of technology stocks🤨

On the topic of low liquidity, July is on course to be the second-slowest month of trading in over 2 years, though we will have a pair of one-off equity events to get past over the next 2 business days. On Monday, the Nasdaq will see a special index rebalance, intended to ease the dominance of the tech megacaps and raise the weightings of other index constituents. JPM expects client activity to exceed $60bln as part of the rebalancing activities alone.

Furthermore, Friday will see $2.4T notional of US equity options expiring, with a high number of call options that are ITM expected to be rolled forward as the risk-on sentiment persists.

#nasdaq #liquidity #US #trading #equities

Increased volatility in the US stock market, awaiting non-farm payroll data on Friday.🤔

Speaking of expensive, this current widening of US real rates (wider) has increased its cross-asset divergence against equities, as reflected in the form of a widening gap between forward SPX PE ratio and real rates. US equities did finally have a down day as the SPX closed down -1.4%, led by weakness in tech and consumer names as bond yields blew out. However, with NFP on deck for Friday, and Apple due to report after the market close today, we would expect the next bigger move in equities to be driven off these releases.

#stock #US #SPX #Apple #equities

Both USD and durable goods stay strong📈
While the durable goods print was marginally stronger than expected, the risk-off impetus was probably driven more off positioning flows, as dealers reported fast-money selling of bond futures ahead of the 5yr treasury auction just as spot Gold collapsed by 1.5% in a concurrent move, hitting 7-month lows at ~1880. USD FX also moved to fresh interim highs against most majors as the dollar strength continued unabated, while equities began their decent once again right after the NY open (SPX -1.3% from open to low).
#durablegoods #Gold #USD #equities #macro

Equities Face Geopolitical Pressure🤝
Over in equities, concerns over geopolitical conflicts, rising oil, and mixed earnings results pressured stocks lower right from the get-go. SPX ended the day down 1.3% with every sector in the red except for energy and consumer staples. On the positive side, Netflix jumped more than 12% in the afterhours as the streaming platform met 3Q earnings expectations, but reported significant user growth and announced plans to raise prices. Meanwhile, Telsa missed earnings estimates but reported gross margin that was in-line with expectations and promised a Nov 30th date for the first Cybertruck deliveries. On the other hand, Lam Research fell 4% and dragged the rest of the semiconductor sector lower on mixed forward guidance, with investors further worrying about the the impact of ongoing US export bans. Finally, Morgan Stanely fell -6.8% on the day for its worst single day drop since June 2020, on poor IBD advisory results and large revenue misses on their wealth management units.
#equities #geopoliticalconflicts #Tesla #MorganStanley #IBDadvisory

Exploring this week's US earnings reports, awaiting signals of economic recovery👀

Back on the US earnings side, we will see a full list of consumer-facing companies reporting next week, including Walmar, Target, and Home Depot to get the latest report card on the exceptional US consumer resilience. Q2 earnings is currently tracking -4% YoY, much better than the Street's forecasted 9% decline, with particular positive surprises in the consumer discretionary sector. Furthermore, Q2 earnings are widely expected to be the trough of the current slowdown cycle, with EPS expected to return to positive territory before the end of the year.

Positions wise, Morgan Stanley reported that dealers' net option gamma position has turned negative for the first time in many months, hence explaining some of the more exacerbated moves in equities over the past week. Furthermore, with systematic funds still holding extended long exposures in equities, markets still feel susceptible to a position-led sell-off in the near term. We continue to advocate taking a more defensive position at this juncture.

#USearnings #EPS #positions #funds #equities

Oil futures surge, equities face multiple challenges🤔
Markets couldn't catch a break as reports of falling crude stock piles spiked oil futures to over $94, up a sizzling +7.3% over 48 hours despite the overall weakness across other asset classes. Over the past month, we have pretty much witnessed a cacophony of concerns against equities with a jump in real yields, USD strength, widening credit spreads, and a downgrade in growth forecasts. While the move in rates was no doubt the worst trigger, it has been a bit of a perfect storm for risk sentiment, and the one-sided (long) sentiment has only exacerbated the painful move lower.
#Markets #oil #equities #USDstrength #macro

BTC price retraces, quarterly trading volume reaches new low 👂👂👂

On crypto, prices saw a retracement along with the move lower in gold and the inverse move in yields, though BTC correlation with overall equities have pretty gone back to zero. Furthermore, quarterly trading volumes on Bitcoin spot came in the lowest levels since 2020, so traders should expect to see further choppy price action and sharp movements on lower liquidity until we see further confirmed mainstream participation, such as with successful ETF filings.

$BTC #ETF #prices #CryptoNewsDaily #equities