"Watch CDS, not EPS"

1. Correlations. "Correlations are on the move, and the pressure on AI stocks is pulling down the stocks/bonds correlation, even though the stocks/oil correlation remains deeply negative. Growth concerns are overshadowing inflation/rates concerns for now."

2. CTAs vs. NDX. "CTAs have sold nearly $3bn of Nasdaq 100 futures over the past three sessions, the largest three-day selling wave since March 2025. Looks like they timed the low perfectly..."

3. Margin debt ROC. "It's hard to accept that extremely fearful conditions (evidenced by extremely narrow breadth, highly skewed sector flows, etc.) are of the extremely bullish variety, given big-picture margin activity."

4. Corporate profit margins. "Corporate America is becoming more profitable. The forward profit margin of the S&P 500 excluding its Information Technology sector has been climbing this year, reaching 12.9% in October."

5. Hyperscaler CDS vs. EPS. "Watch CDS, not EPS. CDS and FCF (Free-cash flow) matter more than EPS for Hyperscalers' valuation multiples. A peak in CDS spreads would signal an inflection in FCF and an end to the de-rating cycle. With the FCF inflection expected only in 2H'27, our underweight remains unchanged."

ICYMI