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FUNDS SEEING RECORD PUBLIC INFLOWS

FUND MANAGERS FORCED TO "CHASE" PERFORMANCE

Click All Charts to Enlarge

THE NEW PARADIGM: This time its AI and the Mag-7 Adoption of it! Meanwhile public inflows into the market have reached historic levels as they don't want to miss out while institutions are forced to "chase" performance through historic narrow breadth - What could possibly go wrong? (see below section: "WHAT IS GOING ON? - REMEMBER WE HAVE SEEN THIS BEFORE!")

FUND FLOWS

The largest weekly inflow to US Growth funds...EVER!.

The largest weekly inflow to US Tech funds...EVER!.

2 - FUNDAMENTAL ANALYSIS

WHAT IS GOING ON? - REMEMBER WE HAVE SEEN THIS BEFORE!

The following three charts best describe what is going on. We have been in this game since before the1987 market crash and have seen this before. It is fundamentally about Financial Institutions and Investment managers being forced to take positions because they are both paid and measured against the market. If they are not on-board they lose performance, clients and money!

The situation only worsens and goes to the ridiculous, when breath narrows significantly (currently at historic levels) and the public enters the markets because of the great returns they are being told about (see chart three).

CHART 1 - PROFESSIONALS, FUNDS AND INSTITUTIONS "CHASING"

The chart shows the "forced chasing" of the Top 50 when markets have been melting up since 2003.

CHART 2 - PROFESSIONALS, FUNDS AND INSTITUTIONS "CHASING"

They must chase the Magnificent -7 because they simply can’t own enough of the handful of names powering benchmark indices higher.

CHART 3 - THE PUBLIC IS NOW ALMOST ALL IN!

THE GREATER FOOL THEORY

There is always the greater fool who will buy the stock when you want to get out. The Greater Fool Theory is showing here in a scenario where the mania could take us to SPX 6k before the blow off top...and then all the way down to 4800 in q1 2026.

... SOME FURTHER FOOD FOR THOUGHT....

Stifel’s Barry Bannister says the US stock benchmark has a shot at reaching the 6,000 mark before the end of 2024 as investors keep piling in, up from just below 5,500 Thursday. But by mid-2026, he expects the gauge to sink back to where it began this year — around the 4,800 level — erasing a fifth of its value.

To be clear, the forecaster says risk assets, and equity markets in particular, are due for a correction much sooner. His official year-end S&P 500 target stands at 4,750, implying a drop of some 13% from today. The index retreated after touching all-time highs Thursday as technology shares came under pressure. Still, the euphoria among investors that’s powered the market for months is set to propel shares higher before they eventually plunge, he says.

“Timing is everything,” Bannister and his team wrote Wednesday in a note to clients, “and we are aware that investors may be in full-fledged bubble/mania mode which looks past our concerns.”

Bannister is not alone as Mark Spitznagel, the founder and chief of Universa Investments, said:

"I've been saying this for a year and a half because people got 2022 so incredibly wrong (we're not in the 70s!). The Fed recklessly popped the greatest credit bubble in human history and now as people realize that the Fed needs to about-face, they're going to get increasingly juked the other way in a face-ripping rally. At the point of euphoria — which is coming — the high will be in and the market will crash worse than the global financial crisis."

 "What matters more than my views on this are how Universa's clients are positioned for it — for both a face-ripping rally and for the worst crash since 1929.

DIVERGENCES ABOUND!

The short term gap between copper and SPX has become very wide. Dr Copper IS trying to tell us something!

DOW THEORY

In last week's Newsletter we outlined our growing concerns with the Trannies within the DOW Theory (LINK). The gap between Transports and SPY is only getting wider and wider. Is tech so powerful that we can dismiss from "all" PROVEN old relationships? NOTE: More Divergence!

S&P 500 vs FED BANK RESERVES

There are two glaring problems with the chart below:

1. The "Jaws-of-Death" will be closed at some point.
2. We have a major Divergence which is always a warning to be taken seriously!

OTHER MAJOR DIVERGENCES

1. Nasdaq 100 & Industrials
2. S&P 500 and Industrials
3. S&P 500 and the NYSE 10 day average Advance/Decline Line Indicator.
4. Small cap Russell 2000 and its 10 day average Advance/Decline Line Indicator

3 - TECHNICAL ANALYSIS.

MARKET DRIVERS

"AS GO THE FINANCIALS, SO GO THE BANKS: AS GO THE BANKS, SO GO THE MARKETS."

MATASII FINANCIAL STOCK INDEX

We continue to keep an eye on both the Bank and Financial stocks to give us an early signal of market direction. We have been showing the banks over the last few weeks, but the Financials now appear to be giving a clearer signal.

• The MATASII Financial Index stocks has begun to exhibit a potential continuation triangle pattern.
• The Elliott Wave analysis supports an "E" wave higher as part of a potential ABCDE pattern.
• Momentum (bottom pane) has found long term support and needs to be watched to see if it breaks shorter term overhead resistance, shown by a dotted descending orange momentum trend line.

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

As goes NVDA, so goes the MAG-7, As Goes Mag-7 so goes The Market.

NVDA - Daily

CHART RIGHT: NVDA v the darling of the Dotcom Bubble (for those who recall). CSCO was dominant. It appears that was nothing!

• NVDA suffers its first down-week in two months.
• NVDA found initial support from Quad-Witch selling at the upper trend line of the previous control channel. This is just above the rising 21 DMA (in grey).
• Momentum (Lower pane) found support at the rising momentum trend line.
• The Dotted Black Trend line in the MATASII Proprietary Momentum Indicator (lower pane below) is suggesting a potential Divergence has been set up. This is normally seen as a warning to the downside that is ahead if the Divergence isn't removed by a movement higher in Momentum.
• Unless the dotted black Momentum line is decisively broken we can expect NVDA to look for lower support levels.
• At some point the major unfilled gaps (at much lower levels) must be filled. NVDA therefore may no longer become a Short to Intermediate Long Term hold, but rather a position trading stock as others entering the space and force margins to contract. 

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

MAGNIFICENT 7

Magnificent 7 is up a magnificent 24% YTD (chart right), contributing >50% of SPX return (NVDA alone = 25%) as monopolistic mega tech monopolizes performance..

Total CAPEX + R&D for the Magnificent Seven this year is expected to total $348bn. (Think about that for a second.)

Here’s another way to frame it - the Magnificent 7 is reinvesting 61% of their operating free cash flow back into

CAPEX + R&D!

• The basket of 'Magnificent 7' stocks pulled back with June Option's "Quad-Witch" to find initial support at the black dotted mid-line of the current rising control channel.
• We continue to be concerned about the momentum Divergence signal that has been occurring for some time (bottom pane). The Momentum trend line acted as overhead resistance this week. Continued caution advised.

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

"CURRENCY" MARKET (Currency, Gold, Black Gold (Oil) & Bitcoin)

10Y REAL YIELD RATE (TIPS)

Real Rates reached our initial overhead resistance level of 2.25% before falling off hard as part of our expected leg lower (chart right).

We are approaching support and a potential turn upward in Yields.

CONTROL PACKAGE

There are TEN charts we have outlined in prior chart packages, which we will continue to watch closely as a CURRENT Control Set:

1. US DOLLAR -DXY - MONTHLY (CHART LINK)
2. US DOLLAR - DXY - DAILY (CHART LINK)
3. GOLD - DAILY (CHART LINK)
4. GOLD cfd's - DAILY (CHART LINK)
5. GOLD - Integrated - Barrick Gold (CHART LINK)
6. SILVER - DAILY (CHART LINK)
7. OIL - XLE - MONTHLY (CHART LINK)
8. OIL - WTIC - MONTHLY - (CHART LINK)
9. BITCOIN - BTCUSD - WEEKLY (CHART LINK)
10. 10y TIPS - Real Rates - Daily (CHART LINK)

GOLD - cfd - DAILY

• Gold cfd's continue to weaken as inflation pressures weaken and yields fall.
• The Gold cfd's have broken through the 50 DMA.
• The 100 DMA is slightly above a 38.2% Fibonacci Retracement and is the likely next stop in finding support.
• The Elliott Wave count still suggests a strong likelihood of a minimum retracement of 38.2% and the 100 DMA.
• Momentum support (lower pane) shows gold has found an important near term support line.
• Though the MATASII CROSS has given an initial SELL signal on the Daily chart, (which we showed in the weekend report), we caution it may be short lived!

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

US EQUITY MARKETS

TIME TO HEDGE?

Soc Gen have been very accurate in their volatility predictions. They are out pushing the "hedge" logic:

• Several leading indicators are pointing to elevated risk over the next few months.
• Volatility, rates and cost of financing all are contributing to low hedging costs.
• Elevated political uncertainty is the latest spanner in the works.
• IDEA: They like put spreads on SPX and EuroStoxx 50 indices. In SPX they look at the December 5050/4500 put spread, max pay off 9.77x. Chart above shows the 6 months 95%/85% put spreads.

CHART RIGHT: The trend of falling ERP has been going on for some time. It is basically telling us we should underweight stocks on a 1 year horizon.



CONTROL PACKAGE

There are FIVE charts we have outlined in prior chart packages that we will continue to watch closely as a CURRENT "control set":

1. The S&P 500 (CHART LINK)
2. The DJIA (CHART LINK)
3. The Russell 2000 through the IWM ETF (CHART LINK),
4. The MAGNIFICENT SEVEN (CHART ABOVE WITH MATASII CROSS - LINK)
5. Nvidia (NVDA) (CHART LINK)

S&P 500 CFD

• The S&P 500 cfd rose aggressively this week before falling off with June Option's "Quadruple-Witch".
• The MATASII Proprietary Momentum Indicator (middle pane) appears to be showing signs of weakening within a Divergence pattern with price and stopped by its overhead momentum resistance trend line.
• We also have an extreme RSI level.
• A likely test of the 21 DMA may occur next week.

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

S&P 500 - Daily - Our Thought Experiment

OUR CURRENT ASSESSMENT IS THAT THE INTERMEDIATE TERM IS LIKELY TO LOOK LIKE THE FOLLOWING:

NOTE: To reiterate - "the black labeled activity shown below, between now and July, looks like a "Killing Field", where the algos take Day Traders, "Dip Buyers", the "Gamma Guys" and FOMO's all out on stretchers!"

• The S&P just hit a new all time high this week before pulling back with June Option's "Quadruple-Witch".
• The MATASII Proprietary Momentum Indicator appears to be showing signs of weakening (lower pane) with firm support quite a bit lower. The Friday pull back did find support at a shorter term Momentum trend line (dotted orange line).
• The Divergence in Momentum (lower pane) needs to be noted along with a clear long term ending wedge.

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

S&P 500 - Monthly - Our Thought Experiment

• We continue to move towards our target of 5566 shown here and on our daily chart (above). We are only 102 points below our target level.

STOCK MONITOR: What We Spotted

MONDAY

• US indices were firmer to start the week (SPX +0.8%, NDX +0.9%, RUT +0.8%) with outperformance in the large-cap sectors of Consumer Discretionary and Technology as the latter was buoyed by Micron (MU) (+4.5%) after BofA and Susquehanna raised PT's of the stock ahead of earnings next week.
• Utilities, Real Estate, and Health were the only ones in the red.
• Indices were buoyed by the turnaround in risk sentiment, albeit off no headline driver, as the Dollar saw slight losses and reversed from earlier highs of 105.640 to lows of 105.30.
• As such, the crude complex was also firmer and buoyed by the aforementioned softer Dollar after initial geopolitical tailwinds, as Israeli PM Netanyahu dissolved his war cabinet.
• Despite saying this, precious metals (XAU, XAG) saw slight losses and Treasuries began the week on the backfoot, after last weeks strength, amid consolidation ahead of Fed Speak.
• On Fed speak, Harker (2026 voter) said if his economic forecast plays out, he thinks one rate cut would be appropriate by years end, meanwhile two cuts or none are also quite possible, but it depends on data.
• For the record, NY Fed Manufacturing was better than feared, with the inflationary gauges of prices paid and received encouragingly dipping, although little market reaction was seen.
• Looking ahead, there is a plethora of Fed Speak ahead, with US Retail Sales also on Tuesday, with RBA rate decision overnight.

INFLATION BREAKEVENS: 5yr BEI +4.6bps at 2.181%, 10yr BEI +3.5bps at 2.223%, 30yr BEI +2.8bps at 2.261%.

REAL RATES: 10Y -- 2.0700%

STOCK SPECIFIC

• Autodesk (ADSK): Starboard Value said it has a current stake in the Co., valued at more than USD 500mln.
• TSMC (TSM): Planning to raise prices for 3nm manufacturing by 5% and advanced packaging by 10%-20% starting next year, amid a capacity shortage expected to last through 2026.
• Disney (DIS): 'Inside Out' sees strong debut.
• Tesla (TSLA): Reduced the price of its Model 3 Long-Range AWD vehicles.
• Micron (MU): Ahead of earnings next week, BofA and Susquehanna raised its PT of the stock.
• Steel Dynamics (STLD): Q2 guidance short of expectations.
• BioNTech (BNTX): US FDA placed partial clinical hold on multicenter and first-in-human phase 1 clinical trial sponsored by Medilink.
• Amazon (AMZN): Prime Video has disrupted the streaming ad market, prompting Netflix (NFLX) to lower ad rates and adopt product placement to sustain its ad business amidst rising competition, WSJ reports.
• Adobe (ADBE): FTC said it has taken action against ADBE and executives for hiding fees and preventing consumers from easily cancelling software subscriptions. ADBE said in a statement that it will refute the FTC's claims in court.
• Citigroup (C): FDIC is to vote on Thursday to downgrade C's rating on its data-management systems to a deficiency, according to the WSJ.
• Apple (AAPL): To end in-house Apply Pay Later installment service, according to Bloomberg. AAPL announced Affirm (AFRM) installment integration last week, and will no longer offer new Apple Pay-later loans to users.
• Qualcomm (QCOM): Could be the exclusive SoC supplier of Samsung Galaxy S25 (vs. S24 accounts for about 40%), according to TF International Securities analyst Ming-Chi Kuo.#

TUESDAY

• Indices were contained on Tuesday but edged higher (SPX +0.3%, NDX flat, DJIA +0.2%, RUT +0.2%) as SPX climbed to another record high with Nvidia topping Microsoft's market cap.
• Sectors were largely in the green with Financials and Tech sitting atop of the pile and Communication Services, Consumer Discretionary, and Materials the only ones in the red.
• On the day, there was a deluge of Fed speak (reviews below), although they garnered little market reaction as they ultimately toed a similar line to Fed Chair Powell, while on the data footing US retail sales were softer than expected, but on the contrary industrial production was better than forecasted.
• Moreover, after the aforementioned retail sales T-Notes were bid across the curve, and saw even further impetus after a stellar US 20yr bond auction.
• In FX, the Dollar was choppy but climbed off retail sales-induced lows with the Swissy and Aussie the clear G10 outperformers with the latter buoyed by a hawkish language from the RBA.
• The crude complex was firmer, continuing on Monday's extensive gains, in thin energy-specific news flow as geopolitical headlines took a back seat. Looking ahead,
• it is Juneteenth market holiday in the US on Wednesday so US players will be out for the day, and as such the calendar docket is very thin with only NAHB housing market index scheduled.

INFLATION BREAKEVENS: 5yr BEI +0.2bps at 2.194%, 10yr BEI -0.1bps at 2.228%, 30yr BEI -0.4bps at 2.261%.

REAL RATES: 10Y - 2.0207%

STOCK SPECIFIC

• Boeing (BA) - CEO said in a Senate hearing that the Alaska Airlines door plug incident was a result of a manufacturing defect; Titanium from suppliers has met standards, and here was a very discreet miss with a lack of paperwork for the removal of the door plug in Alaska Airlines January 5th flight. US Senator Blumenthal says there is overwhelming evidence that the Justice Department should pursue prosecution against Boeing. Meanwhile, NASA delayed BA's Starliner spacecraft's return to earth again and is now targeting June 26th.
• Lennar (LEN) - Guidance for next quarter: new orders and deliveries missed expectations. Co. did beat on earnings and revenue. Expects Q3 profit to be between USD 3.50-3.65/shr (exp. 3.93); Exec says given the cost of living expenses and inflation rates, the consumer is definitely feeling a little bit more distress.
• Super Micro Computer (SMCI) - Adding three new manufacturing facilities in Silicon Valley and globally.
• Phillip Morris International (PM) - Swedish Match North America (PM affiliate) is taking steps to immediately ban online sales on ZYN.com after receiving a subpoena from the District of Columbia.
• NextEra Energy (NEE) - Plans to sell USD 2.0bln of equity units, each valued at USD 50.00.
• Silk Road Medicals (SILK) - To be acquired by by Boston Scientific (BSX) for USD 27.50/shr in cash. Note, SILK closed Monday at USD 21.67/shr.
• Citigroup (C) - Said it is confident in its ability to achieve medium-term targets; and it remains on track to meet 2024 guidance. CFO expects net interest income excluding markets to be modestly down this quarter; he expects markets to be down or flat-ish for Q2.
• Apple (AAPL) - EU antitrust regulators have accepted several measures from Apple regarding its tap-and-go payments system and an associated probe, according to FT citing sources. Elsewhere, the Co. suspended work on the next high-end headset and focused on releasing a cheaper model in late 2025, according to The Information.
• Occidental Petroleum (OXY) - Berkshire Hathaway has acquired another 2.95mln shares in the Co. bringing his stake to nearly 29%.
• Chip names - Lawmakers reportedly look to bar Chips Act winners from using Chinese tools, according to Bloomberg; Intel (INTC) and TSMC (TSM) would be unable to buy Chinese gear for US plants.
• Dollar Tree (DLTR) - Was cited by the FDA for selling lead-tainted Apple Sauce; DLTR reportedly kept selling apple sauce after the lead recall.
• Hewlett Packard Enterprise (HPE) and Nvidia (NVDA) - Announced "Nvidia AI computing by HPE" to accelerate the generative AI industrial revolution.
• Embraer (ERJ) - CEO says Co. is confident in meeting 2024 production guidance of 72-80 commercial jets, is eyeing output of 80-90 jets next year. Believes it will be able to return to production of 100 commercial jets per year by 2026 at the latest.
• Nvidia (NVDA) - To reach a deal to buy software startup Shoreline.

WEDNESDAY

US MARKETS CLOSED - JUNETEENTH

THURSDAY

• Stocks were predominantly lower on Thursday with downside led by the Nasdaq with weakness led by AI-darling Nvidia (NVDA) paring from all-time highs despite gains seen in the pre-market.
• SMCI and DELL also pared their pre-market gains (Musk confirmed the two companies' tech is to be used for xAI, but the two stocks failed to hold onto the initial gains).
• Tech was the clear laggard with the majority of sectors green, outperformance was seen in Energy, Utilities and Financials.
• Despite a lack of news explaining the tech downside, it is worth noting it is quad-witching on Friday with Goldman estimating Friday's OpEx will be the largest ever with over USD 5.1tln of notional options set to expire.
• The macro highlights saw a plethora of CB activity and several US data points.
• On the former, the BoE held rates in a 7-2 vote split but the dovish reaction was seen on remarks in the minutes that the decision to hold or cut was "finely balanced" for some.
• The SNB cut rates by 25bps earlier, in line with the consensus, but a third of analysts surveyed expected a hold. Norges Bank left rates unchanged but with hawkish rate guidance.
• Meanwhile, the PBoC maintained its LPR rates as expected overnight. On US data, Initial Jobless Claims fell, but not as much as expected, while Continuing Claims for the week prior saw a notable rise, similar to what was seen in last week's Initial Claims.
• The Housing data surprised to the downside, while the Philly Fed also disappointed, although the Prices Paid rose. T-notes initially spiked on the data before quickly paring in what appears to be preparation for supply next week, as well as entering month/quarter end next week.
• The Dollar was supported by the gains in US yields, which in turn weighed on the Yen but the Franc underperformed after the SNB rate cut.
• Crude prices rallied through the session as geopolitical tensions remained rife despite a larger-than-expected crude stock draw.

INFLATION BREAKEVENS: 5yr BEI +4.2bps at 2.233%, 10yr BEI +3.4bps at 2.256%, 30yr BEI +1.7bps at 2.273%.

REAL RATES: 10Y -- 2.0171%

STOCK SPECIFIC

• Advanced Micro Devices (AMD) - Incurred a data breach involving sensitive information of future products. The company believes the breach will not have a material impact. In addition, Piper Sandler names it a top pick citing “bright prospects” entering H2.
• Apple (AAPL) - A notorious hacker, thought to be behind many recent breaches of large tech companies, has added Apple to the list, according to Forbes.
• Hewlett Packard Enterprise (HPE) - Continues to expect to close the Juniper Networks (JNPR) deal by the end of 2024 or early 2025, in response to the CMA probe.
• Toyota Motor (TM) - To halt six production lines at five plants in Japan from Thursday evening amid parts shortages, according to Chunichi.
• Boeing (BA) - CEO Calhoun faced calls for immediate resignation during a Senate hearing on Boeing's safety culture. Co. is shifting engineers away from X-66A development, according to Air Current
• DELL (DELL) and Super Micro (SMCI): Tesla (TSLA) CEO Musk said in a post on X that Dell and Super Micro Computer will be building the supercomputer for xAI.
• Oracle (ORCL) - To invest over USD 1bln in AI and cloud computing in Spain.ByteDanc and TikTok - Urged US court of appeals to block a law that would compel divestiture or impose ban app on the app in US by January 19th, in a court filing.
• United Airlines (UAL) - Expects 2024 July 4th weekend to be the busiest on record with over 5mln passengers expected to fly with UAL between June 28th and July 8th. Forecasts summer 2024 travel season will be 5% higher than 2023.
• Boyd Gaming (BYD) - Made an acquisition approach to Penn Entertainment (PENN), according to Reuters citing sources. BYD would also need to win over Walt Disney (DIS), which through its sports network ESPN has a partnership with PENN. Sources said there was no certainty PENN would engage in negotiations with Boyd.

EARNINGS



• Accenture (ACN) - Raised its revenue growth forecasts and reaffirmed its FY24 cash flow. Note, the company missed on EPS and revenue in its Q1 report.
• Kroger (KR) - Beat on Q1 top and bottom line. Exec said Q1's better-than-expected performance from the grocery business helped offset results in the health and wellness business and spending from premium and mainstream customers continue to be strong.
• KB Home (KBH) - EPS, revenue, and deliveries surpassed expectations alongside raising FY housing revenue view.

FRIDAY

• Stocks ultimately finished with a downside bias on quad witching with some notable chop into the closing bell, particularly in AAPL and AMZN shares while NVDA were lower throughout the majority of the session, adding to the losses seen Thursday.
• The main macroeconomic highlight was the flash PMI data from the US which came in hotter than expectations but alongside some optimistic commentary on inflation.
• The European PMI data however was largely disappointing across the board.
• Fixed income settled flat across the curve with morning upside in wake of the European PMIs offset by the downside seen after the hot US data.
• Crude prices were lower throughout the session with the hot PMI data weighing.
• The Dollar saw mild gains, while the Yen lagged to see USD/JPY back above 159.00 with participants cautious of intervention c. 160.
• Attention next week turns to Treasury supply as well as US PCE and GDP data.

INFLATION BREAKEVENS:  5yr BEI -3.3bps at 2.205%, 10yr BEI -2.1bps at 2.237%, 30yr BEI -2.4bps at 2.252%

REAL RATES: 10Y -- 2.022%

STOCK SPECIFIC

• Spirit AeroSystems (SPR): Boeing (BA) is close to a deal to buy back the Co, as BA aims to stabilize its supply chain after its 737 MAX woes.
• Boeing (BA): DoJ expected to allow Boeing to escape criminal prosecution for violating terms of 2021 settlement related to problems with 737 MAX 8, according to the New York Times. However, DoJ later said they have not made a decision.
• Apple (AAPL): Will not roll out AI features in the EU this year because of the Digital Marketing Act (DMA), according to Bloomberg.
• Amazon (AMZN): Mulling a USD 5-10/month fee for Alexa with revamped AI, according to Reuters sources.
• Sarepta Therapeutics (SRPT): FDA approved the expansion of Elevidys' indication for Duchenne muscular dystrophy to include patients aged 4 and older with confirmed DMD gene mutations.
• Visa (V), Mastercard (MA): China is urging Visa and Mastercard to reduce bank card transaction fees for foreign visitors to facilitate payments, Bloomberg reported.
• Chevron (CVX), Hess (HES), Exxon Mobil (XOM): Arbitration panel deciding on Chevron's USD 53bln purchase of Hess remains incomplete, stalling a decision on whether Exxon has a right of first refusal over Hess' Guyana operations.
• Nike (NKE): Upgraded at Oppenheimer. Asana (ASAN): Announced a USD 150mln share buyback, and affirmed Q2 and FY25 guidance.
• Delta Air Lines (DAL): Raised quarterly dividend by 50% to USD 0.15/shr (prev. 0.10/shr).
• Eli Lilly (LLY): Cos. tirzepatide reduced obstructive sleep apnea (OSA) severity, with up to 51.5% of participants meeting the criteria for disease resolution. LLY submitted tirzepatide for the treatment of moderate-to-severe OSA and obesity to the US FDA and will initiate submissions for other global regulatory agencies in the coming weeks. In both studies, tirzepatide achieved all primary and secondary endpoints.
• Tesla (TSLA): Downsized by at least 14% this year after CEO Musk said layoffs would exceed 10%, according to CNBC.

BOND MARKET

CONTROL PACKAGE

There are FIVE charts we have outlined in prior chart packages that we will continue to watch closely as a CURRENT "control set":

1. The 10Y TREASURY NOTE YIELD - TNX - HOURLY (CHART LINK)
2. The 10Y TREASURY NOTE YIELD - TNX - DAILY (CHART LINK)
3. The 10Y TREASURY NOTE YIELD - TNX - WEEKLY (CHART LINK)
4. The 30Y TREASURY BOND YIELD - TNX - WEEKLY (CHART LINK)
5. REAL RATES (CHART LINK)

FISHER'S EQUATION = 10Y Yield = 10Y INFLATION BE% +REAL % = 2.235% + 2.022% = 4.257%

20YR: The USD 13bln auction of 20yr bonds was ultimately very strong. The auction saw a high yield of 4.452%, stopping through the when issued by 2.8bps, the largest stop-through since November 2022, and much larger than the prior stop-through of 0.2bps and the six auction average of a tail of 0.1bps. The B/C ratio was also strong at 2.74x, above the prior 2.51x and average of 2.6x. The strong demand was led by Indirect bidders, which took 77.9% of the auction, well above the prior 70.8% and average of 67.8%. Direct demand saw a step back to 16.4% from 19.2%, beneath the 18.9% average, although the sizable increase from indirect bidders saw dealers, forced surplus buyers, take just 5.8% of the auction, down from the prior 10.1% and average of 13.3%.

10Y UST - TNX - Hourly

• The TNX plunged on the release of the May CPI finding support again at the descending long term trend channel's lower boundary line before beginning a retracement lift.
• Importantly in the near term is that Momentum (lower pane) appears to have reached a longer term support level and appears to be trying to rise. This suggests a test of the 144 EMA is likely ahead next week.

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

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