Pretty amazing to see the *equal-weighted* (not cap-weighted) returns in S&P 500 sectors (through yesterday's close, sorted by 6mth return). Last 3 months: Technology +42.2% 2nd best sector: Energy +7.4% EW Index: 2.5% 8 of 11 sectors down Worst sector: Consumer Staples, -11.2%

Tomorrow brings the monthly employment report covering May. Consensus calling for 85K new jobs and steady unemployment rate of 4.3%. Today's weekly unemployment claims are still in the range they've been in for a long time, fairly low and stable. Challenger data is mostly noise.

All about "rotation" today. Semis are down -5% on the Broadcom news, and Energy is off somewhat, but the rest of the market is up today, so no "real" selling going on. Formerly lagging sectors Health Care and Financials are leading today, and small-caps are outperforming large-caps.

Signs of excessive trader optimism are growing. The CBOE equity put/call ratio has fallen sharply (few puts, more calls), with the 10-day now at its lowest (most optimistic) since 2021-22.

Bond yields up somewhat this morning and stock futures mixed. Oil prices higher again as it turns out, shocker, that the "cease fire" and "negotiations" in the Middle East aren't real and more bombs are falling. ADP employment data was good, but Friday's job data more important.

Reminder that the SEC's "pattern day trader" rules go away starting tomorrow (June 4). Until now, the rule said an investor needed $25K in an account if they are a pattern day trader, meaning more than 4 day trades in a week. Now there is no trade count or $25K minimum, just intraday margin.

Notable that the Tech sector (XLK) is up 0.5% today while the Communications Services sector (XLC) is down -1.2%. Since GOOGL and META (together 30% of the Comm Svcs sector weight) are so often viewed as "AI" along with the big Tech names, you might think the sectors mostly move together . . .

Lol -- we are now spending more for places for computers to sit than places for office workers to sit. Also shows the relative impact of interest rates: non-AI construction (office, industrial, residential) is weak while AI-related construction does not care about rates.

Interesting to see hugely-profitable Alphabet selling equity for AI spending just ahead of the upcoming huge IPOs of Anthropic, OpenAI, and SpaceX (Grok). GOOGL was down -3% today and seems to be trading another -2% lower after hours. Microsoft also trading down after hours.

US stocks have been outperforming other developed (EAFE) markets for many years now. That trend had halted last year as investors imposed a Trump discount on the US, especially after the first tariff news. But now US EPS are growing much faster than EAFE, so US stocks are back to outperforming.

Lots of discussion about how long petroleum product inventories can last with supply so constrained. Latest data from the US Dept of Energy shows inventories for US petroleum products (crude oil, gasoline, distillates) falling rapidly, and will likely reach lowest since 2004 soon.

News that Iran is backing away from talks and Israel is continuing to attack Lebanon has pushed oil prices up sharply today. Big Tech doesn't care much, so it is up today along with a rebound in Energy stocks. Bond yields also higher. The rest of the market is flat to down, small-caps lagging.

Buying pressure continues to be extreme in stocks, as any dip gets bought and volatility (VIX) continues to decline. People also still racing to buy oil on any headline about a "deal", despite little verifiable news. Only 2 sectors up today: Tech and Financials

"Could be close to a deal" . . . again. Meanwhile, Strait is still closed, and OPEC oil production (per Bloomberg's data) is below COVID levels, while US production is holding up but cannot make up for the shortfall.

Notable that Canada reported a slight (-0.1%) drop in GDP in Q1, well below expectations, following a large 1% drop in Q4, creating a "technical recession". France also showed a -0.1% dip in Q1 GDP, and Sweden showed a -0.2% drop, while other European economies (Italy, Belgium, Portugal) did better

Perhaps one of the things weighing on consumer sentiment is that disposable personal income (i.e., after taxes) has now grown more slowly than inflation over the last year. Real DPI year-on-year is now down -1.1%. Aside from the extreme readings around COVID, real DPI growth is not often negative.

A bunch of economic data out today, with the main thing being the April PCE data. There was no growth in personal income for the month but spending was up 0.5%. This makes 3 months in a row where spending growth significantly outpaced income growth -- savings rate falling sharply lately.

Notable that the S&P 500 Tech sector (XLK) underperformed the Energy sector (XLE) by 44% in Q1 of this year (-7% vs +37%). Since the start of Q2, the relative performance has almost perfectly reversed: Tech is up 38% while Energy is down -7%.

Tech (NASDAQ-100) trading down moderately today in a rare bit of selling. Semis down -3% after their blistering rally. Oil stocks also down. Oil lower but wobbling around amid continued uncertainty about any Iran deal claims. Consumer stocks up as oil declines. Health Care also higher today.

NEW BLOG POST: US resumes regional earnings leadership after strong Q1 earnings season The blockbuster Q1 earnings reports in the US left most other countries/regions in the dust, and analysts have been raising EPS estimates broadly. www.millstreetresearch.com/us-resumes-r...

Stocks trading higher again this morning after the long weekend. Oil prices are lower than they were on Friday but higher than they were yesterday. Charlie Brown (media, investors) keeps hoping Lucy (Trump/Iran) will let him kick the football this time, but still no actual progress.

More headlines today suggesting a "deal" with Iran may be imminent pushing oil prices lower, but it seems like just more ongoing market manipulation and investor eagerness to believe any possible good news. The Strait remains basically closed, as shown by Bloomberg's data on vessel crossings.

Stocks are up today, and everyone is waiting for the earnings report from NVIDIA tonight. NVDA is up 1.5% today, and up about 10% in the last 2 weeks, so presumably expectations are positive. Our work shows no break in the positive analyst sentiment but not much movement in EPS estimates lately.

Seeing more analysis suggesting that a material proportion of the tax refund benefit to consumers is being countered by higher energy costs, mostly on gasoline. This is true, and is a net negative for consumers, though total corporate profits will not necessarily be negatively affected.

Stocks pulling back again today, though not severely, as bond yields rise further to the highest since a spike in January 2025. The Strait is still closed, oil is still high, and investors are more worried about inflation now, particularly after some concerning CPI/PPI data.

The recent pullback in Semiconductor stocks comes after an epic run: a 72% rise from March 30th to May 11th, and a 161% rise in the 12 months to May 11th. That pushed the SOXX ETF to more than 60% above its own 200-day average last week, the most stretched it has been in its 25 year history.

Charlie Brown (investors) is getting a little quicker to realize that Lucy (Trump) is not going to let him kick the football, and that Lucy may not even have an actual football at this point. That is, oil is back up after a morning pullback as no one thinks the latest news will do anything.

Back from a week in Europe seeing clients, lots of talk about how to manage a portfolio in a narrow, Tech/AI-driven market with oil/Energy still causing additional volatility. More oil-driven volatility today as Trump tries to reduce sanctions on Iran to try to get a deal on Hormuz.

Looks like a pretty good employment report for April out today. Higher-than-expected payroll growth of 115K, with small net revisions to last 2 months. Unemployment rate steady at 4.3%, though underemployment rate (U-6) rose from 8.0 to 8.2%. www.bls.gov/news.release...

Stocks having a rare down day, but a mild one. Oil still choppy, as no one is sure who or what to believe about events in the Middle East. There could still be a war going on, but maybe not, who's to say . . . But the Strait is still closed.

Oil prices down but volatile this morning on hopes (again) for a US/Iran deal to end hostilities and open the Strait of Hormuz. Oil price volatility captured by the CBOE Oil VIX index (based on the USO ETF) remains very high, and has hit higher levels and for longer than in 2022 (Russia/Ukraine).

Stocks up solidly today as oil prices pull back somewhat. Earnings remain the key driver, not oil, and they are still very strong. Not just in the US, but globally: S&P 500, EAFE, and Emerging Markets indices all have rising EPS estimates. EM index getting an AI boost like the S&P 500 is.

More earnings reports and macro news suggesting consumers are SO FAR not super concerned about gas prices, etc. Atlanta Fed median wage growth at 3.9%, plus some dissaving from higher stock prices and home prices, helping keep spending growth afloat.

Lots of talk and hand waving, but so far Bloomberg's data still show virtually no tankers crossing the Strait of Hormuz. Now just over 2 months of being closed, raising more questions about how long inventory stockpiles for some commodities can last, or what it will cost to work around the Strait.

Things seem to be going, uh, less well in the Middle East today. Oil is up fairly sharply, with the 12-month WTI futures "strip" I like to watch making a new high today at $87.45. Using an average of the next 12 monthly contracts sharply reduces the effects of curve skew and short-term spikes.

Stocks have likely used up a fair amount of the negative sentiment built up in March, as reflected in the VIX. Our indicator compares VIX (implied vol) to recent realized volatility and estimates where it "should" be. The VIX was "too high" for a while, but now is at or below its expected level.

Stocks have had a big run lately, and are getting stuck a bit now between very strong earnings reports for Q1 and the fact that oil prices refuse to go back down as quickly as many had hoped. Still chaos in the Middle East, but the net impact on earnings overall is (so far) still modest.

Earnings overall are good, and that's basically all that matters for the major equity indices. Oil is down some today but still fairly high, while the Strait is still closed. Big Tech has been a mixed bag but the winners (eg GOOG, INTC, AMZN, AAPL, QCOM) outweigh the losers (META, NVDA, MSFT)

In Powell's last press conference as Fed chair, he indicated he will stay on as a governor and will "leave when I think it is appropriate to do so". His governor term ends in Jan 2028. He explicitly said he's staying as governor due to Trump's ridiculous lawsuits and interference.

The Fed left rates unchanged, as everyone expected, but 3 of the voters dissented about the easing bias included in the statement, and one (Miran, Trump's stooge, again) dissented in favor of a rate cut today. Quite unusual to see 4 dissents. Incoming chair Warsh will have his hands full . . .

While the Fed news at 2pm and press conference afterwards will get some attention, most of the focus will be on the flood of earnings reports after the close, including Alphabet, Microsoft, Amazon, and Meta. Semi companies KLA and Qualcomm will also be watched.

Oil up again today as Trump says the US will keep blocking the Strait. Stocks still don’t care much. Notable that while the second-month WTI future ($98) has not quite breached the spike high from early April, the December 2026 contract is at a clear new high today just above $80.

Fed meeting is tomorrow, and no one expects a change in rates, but it will be Powell's last meeting as chair (presumably), and lots of debate about how much energy inflation will "bleed over" into other prices. Fed funds futures basically show nothing happening for months -- Fed is boxed in.

Not a major economic report, but interesting that the S&P Cotality Case-Shiller YouGov Doritos Bowl Home Price Index (not sure about the last bit . . .) showed a further slowing in home prices. The National index Y/Y change dropped to just 0.67% for Feb., and 0.9% for 20-city average.

Oil prices up again, at 2-week high on front-month WTI, now about $100/bbl. News of UAE leaving OPEC bringing prices off their peak a bit on the view they could pump more, though no one there is exporting much right now. Also, OpenAI missed sales and user targets, hurting AI infrastructure stocks.

Interesting news that UAE is quitting OPEC. Running a cartel is more difficult than many think, and seems to be getting harder due to both geopolitical instability and the secular decline in demand for oil.

Resending for the weekday crowd . . . why you might want to consider a subscription to Mill Street's Weekly Roundup report, particularly if you are a stock picker.

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Indices getting a new boost, at new highs as investors chase to avoid being left out. Semis (SOXX) up another 4.7% today, 18th up day in a row, as momentum builds on itself in the AI (and high beta) area, but much less so elsewhere. Oil is down some but not enough to drive these moves.

The last 2-3 weeks have been a return to the narrower, Tech-driven market we saw for most of April-October last year. SPY outperforming RSP, and only 3 sectors outperforming the S&P 500 in the last 2 weeks. Small-caps have held up, but junkier Russell 2000 outperforming higher-quality S&P 600.