Teflon Tech vs European Chaos
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NVDA perfection
NVDA does not care about no imploding Europe as it continues following the 2023 trajectory.
Source: Refinitiv
In terms of stress - buy US Tech
It wasn't long ago people were all bulled up on Europe, busy pointing out EZ as the top performer. This has changed radically. QQQ is now beating the FEZ (Eurostoxx 50 ETF in USD) by miles...and we also plotted the CAC 40 ETF (EWQ) for "reference".
Source: Refinitiv
French puke
French ETF, EWQ, has been gaping lower and lower. This is at the most oversold levels since Sep 2022.
Source: Refinitiv
Want to see quickly oversold
European banks. SX7E, have become very oversold in no time. Maybe there is a bounce trade in the making, but we don't like the strategy of catching falling knives.
Source: Refinitiv
Defending Europe
UBS strategy team is out today defending their relative call that Europe shall outperform US:
"Europe should outperform (closing GDP gap, cutting rates more quickly, higher rate sensitivity to falling rates, compelling valuation discount and getting structurally better because of the EU Recovery Fund. Recently Cont. Europe has abnormally lagged both improving relative earnings revisions and soft data macro surprises" (Andrew Garthwaite, UBS)
Trannies back to imploding
The gap between Transports and SPY is getting wider and wider. Is tech so powerful we can dismiss "all" old relationships?
Source: Refinitiv
Green shoots of "fear"?
The crowd is very long, and in need of downside protection. We are seeing skew catch rather aggressive "bids".
Source: Refinitiv
That gap
SPX vs Fed reserves gap remains very wide.
Source: Refinitiv
Liquidity
Less supportive liquidity picture for equities....and VIX tends to rise when liquidity tightens.
Source: TS Lombard
The biggest bid taking a pause
Buyback blackout window is starting today and running until July 19. This matters...
