DC Lite #504

1. Intermarket Risk Radar. The "Composite pulls together 10 cross-asset ratios that capture how investors are actually positioning. It combines equities, credit, commodities, currencies, and factors, using price behavior rather than narratives to define risk-on and risk-off regimes. Right now, the composite remains above 0.50, which keeps the market in a risk-on regime."

2. Sentiment Indicator. Goldman's US equity sentiment indicator—measures stock positioning across retail, institutional, and foreign investors vs. past 12 months—jumped to its highest level of the year. It has not been in "stretched" territory since Dec'24.

3. Cyclicals vs. Defensives positioning. "DB's latest high-frequency indicator on cyclical vs defensive positioning has fallen to the lows of the year."

4. Global Defensives market cap. "The share of global defensive sectors - consumer staples, health care, and utilities – has fallen to its low of 2000. In 2000, this low in defensive stocks coincided with the top in global TMT share prices in both absolute and relative terms."

5. Return drivers. "The S&P’s year-to-date gains has been driven almost entirely by earnings growth. Now, if we run the same return breakdown for the Nasdaq 100, the Mag 7, or even small-caps, these indexes are actually seeing meaningful valuation contraction."

ICYMI