MARKET WRAP

Stocks surged to fresh highs following a stronger-than-expected June jobs number. Despite some early signs of rotation earlier this week to start the quarter, the SPX added +1.8%, once again beating very low volatility expectations to the upside. On the day SPX +0.8%, QQQ +1.0% and IWM +0.9%

Elsewhere, yields rose rather sharply on the jobs number, with the US10YY now 4.35%. The dollar bounced for the first time in a while, with DXY now $97.15. Gold was lower, but only slightly, as was oil. The VIX may have found a bit of a floor for the time being, closing the week about where it began the week, now 16.54.

After hours: Very quiet after hours with SPY unched from the close and QQQ a tick lower.

• RiskReversal Pod: Dan is joined by ⁠Jeff Richards⁠ of ⁠Notable Capital⁠ to discuss recent trends in the tech and AI investment landscape, including comparing the sometimes skepticism of Wall Street vs the optimism of Silicon Valley and investments in the space by Microsoft, Amazon, Google and more.

MRKT MATRIX: TODAY’S TOP STORIES

• Dow rises 350 points, S&P 500 hits fresh record after a better-than-expected June jobs report (CNBC)

• Hiring Defied Expectations in June, With 147,000 New Jobs (WSJ)

• Oracle, OpenAI Expand Stargate Deal for More US Data Centers (Bloomberg)

• Why stablecoins are shifting from crypto fringe to corporate strategy (Financial Times)

• CEOs Start Saying the Quiet Part Out Loud: AI Will Wipe Out Jobs (WSJ)

• Are bigger AI models better stock pickers? Maybe, but probably not (Financial Times)

• Ripple Seeks a U.S. Banking License, Adding to List of Crypto Companies (WSJ)

• Microsoft Scales Back Ambitions for AI Chips to Overcome Delays (The Information)

• Tesla Is in Disarray. Musk Has Already Moved Beyond Caring About Cars. (WSJ)

• Uber-Backed Moove Raising $1.2 Billion in Debt for Expansion (Bloomberg)

• Hedge funds seek to expand into private credit (Financial Times)

• A Pioneer in Private Credit Warns the Industry is Ruining Its Golden Era (WSJ)

WHAT’S NEXT?

While the jobs print all but erased any realistic chance of a Fed rate cut in July — and also trimmed expectations for the number of cuts over the remainder of the year — traders took the data as a positive, further confirmation of a healthy economy despite all the headlines of the past few months. Yields moved higher, but if inflation stays in check, the thinking is that the Fed will begin to cut rates later this year into an economy that remains strong — a best-case scenario for stocks.

Implied volatility remains subdued but may have found a floor, with the VIX holding around 16. It’s pricing in much smaller day-to-day moves. That kind of low-volatility backdrop typically underprices grinds higher, and that’s exactly what played out this week. Still, it’s a bit surprising to not see the VIX below 16 into a three day weekend, that potential pause in the vol crush is perhaps beginning to reflect some corners of the market that are showing signs of speculative froth — with some highly speculative names going parabolic over the past week.

That type of behavior isn’t necessarily an immediate red flag — in fact, it can begin to supercharge the rally from here — but should we start to see Stocks Higher / VIX Higher conditions it can be a sign of euphoria that tends to lead to a rally topping off and volatility to the downside coming back into play.  

Looking ahead, next week is light on both economic data as well as earnings but it brings us to the brink of the end of the 90-day tariff pause. Those headlines are likely to dominate trading next week, and we’re likely to see headlines this weekend as well. But for now, there are very few signs of fear around the deadline.

We’ll be back in a few days with a full preview of next week!

TODAY’S EPISODES

Watch MRKT Call’s newest episode: Carter Worth Charts $AAPL After Jefferies Upgrade

Learn more about our sponsor, SoFi.

Watch RiskReversal Podcast’s newest episode: Why Startups Stay Private For Longer with Jeff Richards

Dan Nathan is joined by ⁠Jeff Richards⁠, managing partner at ⁠Notable Capital⁠, to discuss recent trends and insights in the tech and AI investment landscape. They explore the skepticism on Wall Street around AI, contrasting it with the optimism in Silicon Valley. Jeff highlights how major tech companies like Microsoft, Amazon, and Google are investing heavily in AI despite public skepticism. The discussion also covers the disparity between private and public market valuations, the growing momentum of companies like Anthropic and OpenAI, and the factors influencing the IPO and M&A landscape. Richards also shares his views on the future of agentic AI, its transformative potential, and challenges related to trust and security. The episode concludes with insights on the impact of AI on various sectors, the need for more companies to go public, and the future financial landscape for venture capital-backed investments

A MESSAGE FROM OUR PARTNER

Subscribe to the RiskReversal YouTube Channel and drop a comment/like to show your support

Want to check out past podcast episodes? Go to wherever you get your podcasts and type in “RiskReversal Media”

We want to hear your feedback! Reply to this email with any comments or questions