"We find the ingredients for a big top are still missing"

1. NFIB. Small business optimism ticked down in May while uncertainty rose from already elevated levels. Notably, hiring plans dropped to a 6-year low.

2. Investment Manager Index. "Investor risk appetite has cooled in June ... as the political environment and high valuations continue to weigh on market sentiment, combined with worries over higher interest rates and recession risks."

3. CTAs vs. US equities. "Last week was all about the concentration unwind, which was accelerated by levered ETF flows. While both of those dynamics remain actively in play, the next wave of structural risk is dealers shifting meaningfully short gamma at the same time we see forced selling from CTAs."

4. Top signals. "During the previous Internet / Telecom Capex cycle in 90s three ingredients were visible by '99-00: a) Renewed Fed-hiking cycle, b) Credit spreads were rising 6-9 months before '00 peak and c) Growth was broadening visible with cyclical data like ISM firmly in expansion with a reading of 60. We find the ingredients for a big top are still missing."

5. AI spending vs. revenue growth. "American companies spending the most on AI have seen their revenue grow five times faster than the economy as a whole. Non-spenders are tracking the economy closely."

ICYMI