US MARKET INTELLIGENCE | MORNING BRIEFING

Research evidence excerpt

US MARKET INTELLIGENCE | MORNING BRIEFING

• BULL CASE – (i) Bullish Macro Data; (ii) Positioning; (iii) Earnings Beats Rewarded; (iv) Mag7 /

Semis Support; (iv) Broadening Instead of Rotating; (v) Bond Market Stabilization; (vi) Lower Equity

Volatility; (vii) Increased M&A

• BEAR CASE – (i) Bond Vol & Yields Rise (ii) De-grossing Continues; (iii) AI Exhaustion; (iv) Ex-US

Rotation; (v) Concentration / Crowding Risk; (vi) MegaCap Tech Credit Issuance; (vii) Policy Risks

• US MKT INTEL VIEW – We remain Tactically Bullish. This week, we look for support to our view

from (i) benign inflation data from both CPI and PPI; (ii) a still strong Consumer; and (iii) Financials to

kick off earnings season stronger than expected, boosting Q2 and H2 expectations. Should that come

to fruition with lower bond yields, look for stocks to response positively with the near-term headwinds

emanating from positioning. The biggest risks to our view are: (1) an escalation in the Middle East that

curtails SoH throughput; (2) weaker than expected earnings prints; and (3) de-leveraging that could

turn into de-grossing. More generally, spikes to bond yields / bond vol as well as poor 1-day / 2-day

stock performance from positive prints will persist through earnings season.

• MONETIZATION MENU (JULY 13) – We continue to favor the barbell of Tech and Cyclicals as the

core part of our trade expression, as well as holding Healthcare as an uncorrelated play. Within Tech,

we think the consensus +Semis vs. -Mag7 or -Software may evolve as bids may return to Mag7 given

its cheap valuation. Though it may be the case that investors need to see a change to either end user

adoption rates of AI and / or an acceleration in earnings that allows that companies to reduce future

reliance on credit markets.