Stocks Reversing Slightly Lower into Afternoon on Israel-Iran War Escalation Worries, Global Growth Concerns, Technical Selling, Healthcare/Tech Sector Weakness

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 36.94 -.04%
• US 10-Year T-Note Yield 4.37% -2.0 basis points
• 3-Month T-Bill Yield 4.30% -2.0 basis points

• China Iron Ore Spot 93.7 USD/Metric Tonne +.15%
• Dutch TTF Nat Gas(European benchmark) 40.9 euros/megawatt-hour -1.7%

• Citi US Economic Surprise Index -23.9 -.8 point

• Citi Eurozone Economic Surprise Index 29.5 -1.1 points

• Citi Emerging Markets Economic Surprise Index 30.0 -1.7 points
• S&P 500 Current Quarter EPS Growth Rate YoY(8 of 500 reporting) +1.4% +1.1 percentage points
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 278.51 +.23:  Growth Rate +9.6% +.1 percentage point, P/E 21.4 -.2
• S&P 500 Current Year Estimated Profit Margin 13.24% +2.0 basis points
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(0 of 10 reporting) n/a
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 433.34 +.59: Growth Rate +16.0% +.1 percentage point, P/E 32.5 -.4
• Bloomberg US Financial Conditions Index .04 -22.0 basis points
• Bloomberg Euro-Zone Financial Conditions Index 1.18 +33.0 basis points
• Bloomberg Global Trade Policy Uncertainty Index 4.3 -.1
• US Yield Curve 46.5 basis points (2s/10s) +3.25 basis points
• US Atlanta Fed GDPNow Q2 Forecast +3.4% unch.
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 39.7% -.8 percentage point

• Cleveland Fed Inflation Nowcast Core PCE YoY +2.58% unch.: CPI YoY +2.62% unch.
• 1-Year TIPS Spread 2.71 +4.0 basis points
• 10-Year TIPS Spread 2.34 +2.0 basis points
• Highest target rate probability for Sept. 17th FOMC meeting: 60.3% (+4.0 percentage points) chance of 4.0%-4.25%. Highest target rate probability for Oct. 29th meeting: 44.3%(-1.6 percentage points) chance of 4.0%-4.25%. (current target rate is 4.25-4.5%)
  

Polymarket:

• US Military Action Against Iran Before July 45.0% -10.0 percentage points
• Will Iran Close the Straight of Hormuz in 2025? 34.0% unch.
• US-EU Trade Agreement by July 9th 51.0% +4.0 percentage points 
• Reconciliation Bill Passed by July 31st 73.0% +4.0 percentage points 

Overseas Futures:

• Nikkei 225 Futures: Indicating +37 open in Japan 
• China A50 Futures: Indicating -44 open in China

• DAX Futures: Indicating +95 open in Germany

Portfolio:

• Slightly Higher: On gains in my utility/financial sector longs, emerging market shorts and index hedges
• Disclosed Trades: None
• Market Exposure: 25% Net Long

Monday's Earnings/Economic Releases of Note; Market Movers

Earnings of Note 
Company/Estimate 

Before the Open:

• (CMC)/.85
• (FDS)/4.30 

After the Close: 

• (KBH)/1.46

Economic Releases

9:45 am EST

• The S&P Global US Manufacturing PMI for June is estimated to fall to 51.0 versus 52.0 in May.
• The S&P Global US Services PMI for June is estimated to fall to 52.9 versus 53.7 in May.
• The S&P Global US Composite PMI for June is estimated to fall to 52.2 versus 53.0 in May. 

10:00 am EST

• Existing Home Sales for  May is estimated to fall to 3.96M versus 4.0M in April.  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Waller speaking, Fed's Bowman speaking, Fed's Kugler speaking, Fed's Daly speaking, Fed's Goolsbee speaking, Fed's Willaims speaking, CFTC weekly speculative net positioning reports, JPMorgan Energy/Power/Renewables/Mining Conference, BofA Commodities Conference and the American Diabetes Assoc. Scientific Conference could also impact global trading on Monday.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Friday Watch

Around X:

• @Business

• Israel struck more of Iran’s nuclear sites and warned its attacks could bring down Tehran’s leadership.
• The chief of the UN atomic watchdog rejected Iranian allegations that a recent nuclear-inspections report, which determined Tehran is in breach of its legal obligations, “in any way” justified Israel’s attacks on the Islamic Republic. 
• Iran is racing to get oil out into the world and ensure revenues continue even as Israel pounds its infrastructure.
• As the conflict between Israel and Iran continues, concerns are growing about disruption to the strategically vital Strait of Hormuz. Alaric Nightingale explains.
• Europe risks drifting into stagnation without urgent action to tackle slowing growth, weak investment and rising geopolitical threats, the IMF warns.
• Elon Musk’s $33 billion xAI buyout of social media platform X has sparked new scrutiny from the European Union as regulators size up a penalty under the Digital Services Act.
• Former Treasury Secretary Lawrence Summers said he expects Donald Trump to name a mainstream candidate to replace Federal Reserve Chair Jerome Powell.
• Investors are bracing for $6.5 trillion of notional US options expiring on Friday, in a move that could free stocks to swing more wildly than the subdued changes seen in recent weeks.

• @ZeroHedge 

• "No Kings", Except For The Bureaucrats.
• Netanyahu Threatens Assassination Of 'Modern Hitler' - Iran's Ayatollah.
• ZIRP is back. Coming to every central bank near you.
• Fewer Ships Enter Strait Of Hormuz Even As Satellite Images Show Iran Races To Get Its Tankers Out Of Gulf. (map)
• Tanker rates originating in the gulf are soaring. (graph)  
• *LEAVITT: IRAN CAN AND SHOULD MAKE A DEAL OR FACE CONSEQUENCES *LEAVITT: TRUMP REMAINS IN CONTACT WITH NETANYAHU.
• Two US Soldiers Die In Non-Combat Incidents In Middle East As Region On Edge.
• *LEAVITT: TRUMP THINKS 'SUBSTANTIAL CHANCE' OF IRAN NEGOTIATIONS. *LEAVITT: WITKOFF HAS BEEN IN TOUCH WITH IRAN.  
• *LEAVITT: TRUMP ALWAYS INTERESTED IN DIPLOMATIC SOLUTIONS.
• Watch Live: WH Says Trump To Decide On Attacking Iran 'Within Next 2 Weeks'.
• Hezbollah threatens to target US bases and close Strait of Hormuz if Washington joins strikes on Iran: Al Hadath.
• IMF Chief Says Now Is Great Time to Boost Global Role of Euro. what is it with these desperate attempts to force the world to use a dead currency. first the CBDC thing failed miserably, now this full court press.    
• General Mills Announces Removal Of Synthetic Food Dyes, Starting With Cereals.
• US is AI, Europe is Olives... Are investors giving up on Europe? Chart shows SPX vs SX5E ratio continues moving higher... 

• @CNBC

• China expectedly keeps key lending rates steady after May cut.
• Japan's core inflation hits highest level since January 2023, putting pressure on BOJ to raise rates.
• Meta tried to buy Ilya Sutskever's $32 billion AI startup, but is now planning to hire its CEO.

• @WSJ

• Democrats and clean energy advocates are ratcheting up pressure on a handful of Republican senators to salvage billions of dollars in projects.
• Elite progressive conformity is a problem across the Western world, and a telling example was exposed this week in the United Kingdom. A hat tip to Elon Musk for prodding the Brits to confront the scandal of so-called grooming gangs.

• @MarioNawful   

• REZA PAHLAVI: LATEST REPORTS SAY REGIME CONTROL IS COLLAPSING FROM WITHIN. “The latest report that we have had, Martha, is that the control of the regime is almost collapsing. And we see more and more of those reports coming to us from personnel within the military or intelligence that say so. It's really falling apart much faster than it was, let's say, last week. The problem, however, is that the regime has cut off the nation from any communication. Internet and even landlines are down.”
• ELON: NEURALINK VISION IMPLANTS COULD BRING “SUPER POWER” SIGHT. "I think in the next 6 to 12 months, we'll be doing our first implants for vision, where even if somebody's completely blind, we can write directly to the visual cortex. We've had that working in monkeys. Actually, I think one of our monkeys now has had the visual implant for 3 years. At first, it'll be relatively fairly low resolution, but long term... you'd have very high resolution and be able to see in multispectral wavelengths. You could see in infrared, ultraviolet, radar. It's like a super power situation." (video)
• FORMER CIA OFFICER: “IF YOU THINK YOU HAVE PRIVACY, YOU’RE MISLED”. Former CIA officer and U.S. Air Force combat veteran: “Your phone, your watch, your smart fridge, even your kids’ devices, all become targets. WhatsApp, Signal, Telegram, all can be cracked or cloned. And yes, tech giants will cooperate if governments demand it.” (video)

• @GatewayPundit

• AT LONG LAST: France To Change Legislation to Finally Try To Stop UK’s Migrant Invasion by Small Boats Crossing the Channel.
• ‘Who Was Running the Country?’ – Witnesses Testify on Biden Health Cover-Up, Autopen Scandal (VIDEO) 
• HERE WE GO: Judge Hannah Dugan’s Trial for Obstruction of ICE Agents is OFF the Calendar as Court Possibly Rules on Motion to Dismiss Case.
• YIKES: 62 Percent of Democrats Want Party Leadership to be Replaced — Believe They’re Too Focused on Woke Issues.

• @KobeissiLetter

• This is incredible: A net 31% of institutional investors are underweight the US Dollar, the most in 20 years, per Bank of America. This has declined by ~52 percentage points over the last 5 months. Furthermore, asset managers and leveraged funds' net positioning on the US Dollar has fallen to near its lowest in 3 years. As a result, the US Dollar index has declined 9% year-to-date, marking its worst performance this century. This puts the US Dollar now on track for its biggest drop in the first half of the year since 1986. The US Dollar is historically unpopular right now.

• @GenFlynn

• The leader of the ongoing Marxist revolution in America, Barack Hussein Obama
  @BarackObama. Thank you @realDonaldTrump for keeping the flame of freedom alive!!! (pic)

• @VigilantFox

• More stories: Trump Admin Closes Biden-Era Loophole That Let China Scoop Up Americans’ DNA.

Night Trading 

• Asian equity indices are -.5% to +.5% on average. 
• Asia Ex-Japan Investment Grade CDS Index 79.75 +2.0 basis points. 
• China Sovereign CDS 52.25 +3.25 basis points.
• China Iron Ore Spot 94.1 USD/Metric Tonne +1.5%.
• Polymarket: US Military Action Against Iran Before July 40.0% -26.0 percentage points
• Polymarket: Will Iran Close the Straight of Hormuz in 2025? 30.0% -9.0 percentage points
• Swiss Franc/Offshore Chinese Renminbi Cross 8.80 -.06%.
• Bloomberg Emerging Markets Currency Index 37.0 +.03%.
• Bloomberg Global Risk-On/Risk Off Index 68.0 -.5%.
• US 10-Year Yield 4.39% n/a.
• Volatility Index(VIX) futures 21.1 +1.6%.
• Euro Stoxx 50 futures +.5%. 
• S&P 500 futures -.33%. 
• NASDAQ 100 futures -.29%.

Morning Preview Links

BOTTOM LINE: Asian indices are mostly higher, boosted by industrial and commodity shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed.  The Portfolio is 25% net long heading into the day.

Evening Headlines

Around X:

• @Business

• President Trump said he's meeting with advisers on the Iran-Israel conflict but remained coy about whether the US plans to join Israel's offensive. "It's possible that you're going to have to fight for them not to have nuclear," he said Wednesday. 
• Israeli Prime Minister Netanyahu thanked President Trump Wednesday "for standing by us" and "for the support the United States offers in defending Israel's skies" (translation via AP).
• The Bank of England is expected to keep interest rates at 4.25% and signal it is sticking with its one-cut-every-other-meeting approach.
• Here’s the latest news and analysis on the oil market.
• US Federal Reserve officials continued to pencil in two interest-rate cuts in 2025, though new projections showed a growing divide among policymakers: Here’s your Evening Briefing. 
• Amazon is ordering some corporate employees to move closer to their managers and teams. 
• Trump’s administration urged the Supreme Court to turn away a request for fast-track review of his sweeping tariffs. 
• Senate Republicans are crafting provisions to provide funding for struggling rural hospitals in order to resolve one of the issues holding up passage of President Donald Trump’s tax-cut bill. 
• The Social Security trust fund will become unable to pay scheduled benefits to retirees and the disabled as soon as 2034, new projections show — one year earlier than last year’s estimates. 
• Foreign investors’ holdings of US Treasuries held close to a record high in April, despite the turmoil in financial markets in the wake of President Donald Trump’s tariffs. 
• Coinbase is launching a platform designed to make stablecoins a go-to payment method for online transactions, a potentially big leap forward in the mainstream adoption of cryptocurrencies meant to track the US dollar.
• There's a case for an AI future less like the Terminator and more like Astro Boy, writes
  @cathythorbecke. Viewing machines as colleagues, not overlords has merit. 
• Get up to speed on what's moving global markets.
• Here's what you need to know to start your day.  

• @Zerohedge 

• *US EYES THIS WEEKEND AS POSSIBILITY FOR IRAN ATTACK.
• Average Age Of US Women Giving Birth Increases To Nearly 30: CDC.
• This person teaches at Harvard Law School. 
• LA District Attorney Announces Charges Against 30 People Over Anti-ICE Protests.
• NY Gov. Kathy Hochul announces that taxpayers will cover $50 million in legal services for criminal aliens in the state. No, this is not parody.
• Homeowners Worried About Chemicals Being Spread In Sewage Fertilizer.
• Trump Has Reportedly Approved Iran Attack Plans But Is Withholding Final Order. 
• If Iran’s Oil Is Cut Off, China Will Pay the Price. 
• MAGA is back - US > RoW is vividly on display as hedge funds have recently allocated far more risk towards US stocks. (graph)
• Device Linked To Alleged Political Assassin Traveled To High-Risk Countries, Raising Red Flags Over NGO Ties.
• Stocks Pump'n'Dump As Powell Pessimism Trumps Iran Optimism.

• @MarioNawful

• ARE CHINESE CARGO PLANES SECRETLY DELIVERING WEAPONS TO IRAN? Three Chinese Boeing 747 freighters reportedly departed mainland China over the weekend, turning off transponders and diverting from filed flight plans near Iranian airspace. Radar data shows flights Luxembourg to Dubai vanishing over Central Asia before dropping off near Iran, never arriving in Europe. The aircraft reportedly carried heavy military equipment known to be used by Chinese military contractors, delivered just days after Israeli strikes crippled Iranian missile and air defense infrastructure. While unconfirmed, the timing and secretive flight path suggest military equipment or systems transfers.
• ISRAEL HIT IRAN’S TOP OIL AND GAS SITES INCLUDING SOUTH PARS AND TEHRAN DEPOT. Israel targeted major Iranian energy facilities over the past week, including the massive South Pars gas field (Phase 14), the Fajr Jam gas plant, and Tehran’s Shahran oil depot. The strike on South Pars Phase 14 halted production of 12 million cubic meters of gas. Fajr Jam, one of Iran’s largest gas processing plants, was also damaged. The Shahran facility, a critical fuel storage and distribution hub for Tehran, was among the confirmed targets. 
• BREAKING: ARAK NUCLEAR COMPLEX UNDER EVACUATION ORDER OUTSIDE TEHRAN. This evacuation order, which is first outside of Tehran, is for the Arak Nuclear Complex, which contains a 40MW heavy water nuclear reactor believed to be non-operational.
• U.S. NAVY HITS 2025 RECRUITING GOAL 3 MONTHS EARLY. The U.S. Navy has met its recruiting target for Fiscal Year 2025 three months ahead of schedule, adding 40,600 future sailors. Officials say morale is surging across the force. 
• FOX POLL: 73% SAY IRAN IS "REAL THREAT" TO U.S. SECURITY. New Fox News survey shows dramatic 13-point surge in Americans viewing Iran as national security threat, with majorities across all parties agreeing. Yet voters remain split on Israeli strikes: -49% approve -46% disapprove. Key findings:  
• GROK 3 UNLEASHED WITH MAJOR PRODUCTIVITY UPGRADES. Grok 3 now scans 50-page PDFs in seconds, writes human-quality content, delivers structured research answers, and builds full-stack apps with zero code. It finds insights, answers doc questions, pulls real-time data from X, compares viewpoints, and outputs deploy-ready code. From whitepapers to apps, it’s all automated.

• @bennyjohnson

• Trump and Elon defund USAID. ***one month later***. DNC: “we’re broke now”.

• @BGatesIsaPsycho

• Britain just voted overwhelmingly to legalise abortion right up until the moment a Mother gives birth. This bill barely received any debate or legacy media attention & is just more Anti-Human, Anti-Life Agenda sentiment from the evil Globalists who own all our Politicians.

• @unusual_whales

• This is happening again and again on every bill or tariff where information is leaking out, and people are trading on it. If you cannot beat them, join them by using Unusual Whales. We built the best software for this type of trading. See more:

• @DC_Draino

• This is mindblowing info from @MikeBenzCyber. The Bidens were taking tens of millions from China, and now the FBI confirms China helped rig the 2020 election? But it gets worse... When President Trump started tweeting about foreign countries printing counterfeit ballots, his own CISA activated a new censorship program that specifically blocked those types of statements from social media. Chris Krebs, the Bidens, and any other accomplices in the greatest election steal in US history must be held accountable for TREASON.

• @KobeissiLetter

• BREAKING: Britain is considering participating in a war against Iran if the United States intervenes with Israel against Iran, per The Times. Markets now await any potential peace deal talks over the next 24-48 hours.

Stocks Slightly Higher into Final Hour on Iran-Israel Ceasefire Hopes, Stable Long-Term Rates, Short-Covering, Tech/Financial Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Most Sectors Rising

• Volume: Around Average

• Market Leading Stocks: Outperforming

Equity Investor Angst:

• Volatility(VIX) 20.1 -6.9%
• S&P 500 Intraday % Swing .63 +71.5%
• Bloomberg Global Risk On/Risk Off Index 70.6 +2.9% 
• Swiss Franc/Offshore Chinese Renminbi Cross 8.79 -.18%

• Euro/Yen Carry Return Index 187.4 -.14%

• Emerging Markets Currency Volatility(VXY) 8.14 +1.2%

• CBOE S&P 500 Implied Correlation Index 22.0 -7.0% 

• ISE Sentiment Index 130.0 -14.0

• Total Put/Call .91 -3.2%

• NYSE Arms 1.34 -.74%
• NYSE Non-Block Money Flow -$94.3M 
  

Credit Investor Angst:

• North American Investment Grade CDS Index 56.2 -1.1%
  

• US Energy High-Yield OAS 376.0 +.1%
• Bloomberg TRACE # Distressed Bonds Traded 224.0 +3.0

• European Financial Sector CDS Index 63.2 +1.9%
  
• Deutsche Bank Subordinated 5Y Credit Default Swap 143.3 +1.5%
  

• Italian/German 10Y Yld Spread 95.0 unch.

• Asia Ex-Japan Investment Grade CDS Index 78.0 +1.5%
  

• Emerging Market CDS Index 168.5 +1.2%
• Israel Sovereign CDS 112.77 +2.3%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 23.9 +.15%

• 2-Year SOFR Swap Spread -22.5 basis points +.25 basis point

• 3M T-Bill Treasury Repo Spread 3.5 basis point +1.75 basis points

• 3-Month EUR/USD Cross-Currency Basis Swap -1.5 +.25 basis point
• MBS  5/10 Treasury Spread 152.0 unch.
• Bloomberg CMBS Investment Grade Bbb Average OAS 609.0 +2.0 basis points
• Avg. Auto ABS OAS 56.0 unch.

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 37.0 unch. 
• US 10-Year T-Note Yield 4.39% unch.
• 3-Month T-Bill Yield 4.32% +2.0 basis points

• China Iron Ore Spot 92.7 USD/Metric Tonne +.3%
• Dutch TTF Nat Gas(European benchmark) 38.7 euros/megawatt-hour -1.6%

• Citi US Economic Surprise Index -23.1 -2.3 points

• Citi Eurozone Economic Surprise Index 30.6 +.3 point

• Citi Emerging Markets Economic Surprise Index 31.7 +.2 point
• S&P 500 Current Quarter EPS Growth Rate YoY(4 of 500 reporting) +.3% unch.
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 278.28 +.07:  Growth Rate +9.5% unch., P/E 21.6 unch.
• S&P 500 Current Year Estimated Profit Margin 13.22% unch.
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(0 of 10 reporting) n/a
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 432.75 +.23: Growth Rate +15.9% +.1 percentage point, P/E 32.9 -.2
• Bloomberg US Financial Conditions Index .26 -14.0 basis points
• Bloomberg Euro-Zone Financial Conditions Index .85 -5.0 basis points
• Bloomberg Global Trade Policy Uncertainty Index 4.4 +.1
• US Yield Curve 43.25 basis points (2s/10s) -5.0 basis points
• US Atlanta Fed GDPNow Q2 Forecast +3.4% -.1 percentage point
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 40.5% +.8 percentage point

• Cleveland Fed Inflation Nowcast Core PCE YoY +2.58% unch.: CPI YoY +2.62% +1.0 basis point
• 1-Year TIPS Spread 2.67 +2.0 basis points
• 10-Year TIPS Spread 2.32 unch.
• Highest target rate probability for July 30th FOMC meeting:  89.4% (+6.1 percentage points) chance of 4.25%-4.5%. Highest target rate probability for Sept. 17th meeting: 60.0%(+6.9 percentage points) chance of 4.0%-4.25%. (current target rate is 4.25-4.5%)
  

Polymarket:

• US Military Action Against Iran Before July 55.0% -11.0 percentage points
• Will Iran Close the Straight of Hormuz in 2025? 34.0% -5.0 percentage points
• US-EU Trade Agreement by July 9th 47.0% -8.0 percentage points 
• Reconciliation Bill Passed by July 31st 69.0% +4.0 percentage points 

Overseas Futures:

• Nikkei 225 Futures: Indicating -160 open in Japan 
• China A50 Futures: Indicating -116 open in China

• DAX Futures: Indicating -11 open in Germany

Portfolio:

• Slightly Lower: On losses in my industrial sector longs and index hedges
• Disclosed Trades: None
• Market Exposure: 25% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Growth +.2%
  

Sector Underperformers:

• 1) Steel -6.5% 2) Energy -.5% 3) Defense -.3%

Stocks Falling on Unusual Volume: 

• V, PYPL, MA, TECX, VRNT, TCOM, BTDR, TMDX and SBET

Stocks With Unusual Put Option Activity:

• 1) AMKR 2) GRAB 3) VERV 4) CRCL 5) QXO

Stocks With Most Negative News Mentions:

• 1) RGC 2) ACB 3) ALL 4) SRPT 5) DNUT

Sector ETFs With Most Negative Money Flow:

• 1) XLI 2) XLV 3) XLU 4) XLP 5) OIH

Charts:

• ETFs Falling on Unusual Volume
• Stocks Falling on Unusual Volume