Adriano

[Jurrien Timmer @TimmerFidelity]

Check out the Mag 7. Its payout ratio is down to 37%. In absolute terms the Mag 7 index has only drifted sideways since October 2025, and its relative price has been diverging lower. The end of an era?

[Jurrien Timmer @TimmerFidelity]

Earnings season started this week, and with only 22 companies reporting we don’t yet have a statistically robust sample. For now, the high expectations (per the 24% growth estimate) have been met, and the estimate has now bounced to 26%.

[The Kobeissi Letter @KobeissiLetter]

BREAKING: Bitcoin ETFs attracted +$900 million in inflows last week, the largest weekly inflow since early May.

This marks a sharp acceleration from +$197 million in inflows in the prior week.

The largest Bitcoin ETF, $IBIT, led the surge, attracting +$193 million last week, after bringing in +$282 million the week before.

Subsequently, on Monday and Tuesday, $IBIT saw additional inflows of +$115 million and +$164 million.

This brings the total $IBIT inflows to +$501 million so far in July, on track for the largest monthly intake since April and the 3rd-largest this year.

Investor demand for Bitcoin funds is rapidly improving.

[Peter Mallouk @PeterMallouk]

Hot IPOs can be exciting - but chasing them at any price is not a sound investment strategy.
SpaceX is already down 46% from its peak and the wave of selling from early investors and insiders hasn’t even begun.

[Jurrien Timmer @TimmerFidelity]

The semiconductor boom has not gone unnoticed, as the chart shows below. I added up flows in the various US and KOSPI-listed semiconductor ETFs, and the result is eye catching. I would look for those flows to reverse before calling for the next up leg for the AI boom.

[Jurrien Timmer @TimmerFidelity]

With the AI momentum going in reverse in recent days, the inevitable question is whether it’s just a correction or something bigger. My sense is that as long as the fundamentals are supportive, the occasional sentiment shakeout will be just that.

[The Kobeissi Letter @KobeissiLetter]

The AI boom is transforming one of the biggest deflationary forces into a key source of US inflation:

Import prices for computer and electronic products surged +7.4% in the first 6 months of 2026, to 77.1 points, the highest since January 2016.

This also marks a +8.0% YoY jump, the largest annual increase on record.

This represents a historic reversal from a downtrend which persisted for over two decades.

Between 2006 and 2019, computer and electronic product import prices fell -30%, as improving technology and manufacturing efficiency consistently pushed costs lower.

Now, the AI investment boom is straining manufacturing capacity for semiconductors, servers, and electronic components, as companies race to build out AI infrastructure regardless of cost.

The AI revolution has flipped technology from a long-term source of deflation into a major driver of inflation.

[Jurrien Timmer @TimmerFidelity]

With the Mag 7 losing its magnificence, the market continues to broaden out in a constructive way. Even though the S&P 500 cap-weighted index has not made a new high since June 2, this is preferable to a scenario in which the mega caps drag the index sharply lower. Sideways is fine (for a while).

[The Kobeissi Letter @KobeissiLetter]

Hedge funds are dumping US tech stocks at a record pace:

Hedge funds have sold information technology stocks in 6 of the last 8 weeks.

This brings total 8-week sales to the largest in at least 10 years.

Last week alone, technology was the most-sold US sector among hedge funds.

As a result, tech exposure as a % of total market exposure is down to its lowest since February 2026.

At this rate, tech exposure could fall to its lowest in at least 5 years as early as next week.

Hedge funds are rapidly moving to the sidelines.

[The Kobeissi Letter @KobeissiLetter]

A massive leverage unwind is underway in semiconductor ETFs:

Assets under management (AUM) in US leveraged semiconductor ETFs have dropped -$63 billion from the June peak, to $100 billion, the lowest since late April.

This marks a -39% decline, the largest drawdown since April 2025, when assets more than halved from their August high.

This also accounts for 63% of the -$100 billion decline in AUM across all US leveraged ETFs over the same period.

The selloff came after assets in these funds nearly tripled between the last week of March and their June peak.

Even after this sharp unwind, leveraged semiconductor ETF assets remain +400% above January 2023 levels.

Investors are aggressively cutting leverage.

[The Kobeissi Letter @KobeissiLetter]

Aggressive selling continues in tech stocks:

The technology sector ETF, $XLK, posted -$8.7 billion in outflows over the last month, the largest withdrawal of any S&P 500 sector.

This was followed by the energy sector ETF, $XLE, at -$1.0 billion, and the communication services sector ETF, $XLC, at -$500 million.

The financial sector ETF, $XLF, attracted +$2.1 billion in inflows, the largest intake among all sectors.

Furthermore, the healthcare ETF, $XLV, and the utilities ETF, $XLU, attracted +$800 million and +$600 million in inflows, respectively.

Healthcare, energy, and financial ETFs have been the best-performing sectors over the last month, gaining +7.4%, +6.3%, and +4.5%, respectively.

Over the same period, $XLK has declined -5.4%, making it the worst-performing sector.

Technology stocks are taking a breather.

[The Kobeissi Letter @KobeissiLetter]

The current bull run is historic:

The S&P 500 is up +95% since the end of 2022, placing the current bull market within the strongest 10% at this stage of the cycle, in data going back to 1928.

By comparison, the top 25% of historical bull markets gained roughly +50% over the same period.

Meanwhile, the median bull market delivered just ~35% after 3.5 years.

The current bull run has remained within the strongest 10% of historical bull markets for 2 years, excluding the March-April 2025 correction.

Since the April 2025 low alone, the S&P 500 has surged +51%.

Market momentum is incredibly strong.

[Jurrien Timmer @TimmerFidelity]

Within equities, the market has remained separated between AI and ex-AI, seeming to make it a binary choice to either stay at the party or go home. One of the few outliers remains the Eurozone banks, which have delivered outstanding returns on par with the AI space while being largely uncorrelated to the S&P 500 index and sporting a P/E of only 11x.

[Jurrien Timmer @TimmerFidelity]

With all the talk of semiconductor ETFs captivating the fast money, I can’t help but keep an eye on the dot com analog. I’m sure this analog will break down at some point (as all analogs do), but so far it has continued to be spot on, both in terms of price and the 5-year CAPE ratio.

[Jurrien Timmer @TimmerFidelity]

One big difference between now and then is that today’s fundamentals are backing up the valuations. While the 5-year CAPE ratio above raises eyebrows, booming earnings are so far keeping valuations in check. In fact, the chart below showing the forward P/E against high yield credit spreads suggests that valuations are quite reasonable today.

[Jurrien Timmer @TimmerFidelity]

One question mark hanging over the secular trend concerns the supply and demand for shares. Looking at the Equity Issuance chart, we know that there’s an issuance boom underway (second only to 2021), with more share dilution hitting the tape as early as next month when SPCX insiders get unlocked.

But that’s only half the story. The other half is that the current capex boom is taking away the bandwidth for companies to buy back their shares. In the Debt & Equity Financing chart below, we see that companies are increasing their debt issuance while they are issuing more shares. This comes at the expense of buybacks, which as a percentage of earnings is down to only 31%.

[The Kobeissi Letter @KobeissiLetter]

Semiconductor stocks are the new leaders of the market:

Micron, $MU, has contributed ~1.4 percentage points to the S&P 500's +8% gain over the last 6 months, the largest contribution of any index constituent.

This comes as the stock rallied +188% over this period.

AMD, $AMD, ranks 2nd with a ~0.9 percentage point contribution after surging +158%.

Apple, $AAPL, and Intel, $INTC, follow with ~0.8 percentage point contributions as their stocks gained +20% and +205%, respectively.

Broadcom, $AVGO, Nvidia, $NVDA, and Sandisk, $SNDK, each added ~0.4 percentage points with returns of +9%, +5%, and +395%, respectively.

A handful of chip stocks are powering the broader market.

[Jurrien Timmer @TimmerFidelity]

The US equity market has continued to broaden nicely, with the S&P 500 equal-weighted index making consistent new highs while the cap-weighted index takes a breather.

[The Kobeissi Letter @KobeissiLetter]

Crypto funds are showing their first signs of a recovery:

Crypto ETFs attracted +$281.8 million in inflows last week, the first weekly inflow since the 2nd week of May.

Bitcoin funds posted +$197.4 million in inflows, while Ethereum funds attracted +$84.4 million.

This also marks the end of an 8-week streak of outflows, totaling more than -$7 billion.

As a result, trailing 12-month inflows are down to +$1 billion, from +$10 billion in late April.

By comparison, inflows peaked at +$12 billion in October 2025.

Buyers are beginning to return to the crypto market.

[The Kobeissi Letter @KobeissiLetter]

Shocking stat of the day:

Nvidia, $NVDA, Micron, $MU, Broadcom, $AVGO, and Applied Materials, $AMAT, are now expected to generate a record $430 billion in combined free cash flow (FCF) over the next 12 months.

That would be more than TRIPLE the FCF they generated just 2 years ago.

At the same time, the combined FCF of Amazon, $AMZN, Alphabet, $GOOGL, Meta, $META, Microsoft, $MSFT, and Oracle, $ORCL, is projected to turn negative for the first time on record.

That would mark a massive reversal from the +$260 billion peak reported by these companies in 2024.

This comes as AI-related CapEx by these 5 companies is estimated to surge to ~$1.8 trillion in 2026 and 2027 combined.

Chipmakers are becoming cash machines, while AI giants are burning record amounts of capital.