Yesterday, the S&P 500 finished +0.02%, mainly on the strength of Nvidia (NVDA) -that’s what you call scratching out a gain.

The action was on the NASDAQ Composite, where more than six billion shares were traded, and less than four billion were traded on the New York Stock Exchange (NYSE). 

Market Breadth	NYSE	NASDAQ
Advancers	989	1,835
Decliners	1,834	2,458
New Highs	126	139
New Lows	53	118
Up Volume	1.82 billion	3.65 billion
Down Volume	1.95 billion	2.73 billion

Growth & Nothing Else 

Last week, large-cap growth was the only factor that finished higher, and yesterday, it was much the same (large-cap core eked a gain). 

Heat Map

Semiconductors surged, and the ‘Mag Seven’ got into the mix, but that was about it other than Energy (XLE).

Bonds & Boa Constrictors 

There is an old saying there will always be buyers of U.S. debt no matter how much is issued. The question is, at what price will buyers settle?  With that in mind, the bond market is like a boa constrictor…it has endless ability to consume just about every animal on land.  Janet Yellen seems hellbent on seeing if this boa can also consume an elephant.  

The U.S. Treasury auctioned off $136 billion in notes yesterday, and there were severe digestion issues as the dealers had to eat more than they wanted to. Both two and five-year notes saw high yields above when issued.

2-Year Note	5-Year Note

Never-Ending Supply

The ten-year bond yields are straight and back above 4.50%.

Have you heard about the significant scandal brewing at Red Lobster, where many locations have gone under? They are investigating who came up with the idea of never-ending shrimp.  That promotion might have gotten customers in the door but moved the company into bankruptcy. Right now, Janet Yellen is running a similar promotion with bonds. Will our fate be the same?

Today’s Session

It's been a strong run for the stock market, which has seen the S&P 500 up 23 of the last 30 weeks, and that puts it in rarefied company.  You must go back to 1989 for the last instance.

Of course, this is a unique market because the grand slams, known as the Magnificent Seven, have enjoyed meteoric growth.

And more recently, it’s been The Magnificent One: Nvidia (NVDA), which has seen its market cap climb from $286 billion in October 2022 to $2.8 trillion.  

Too Much Concentration

This has created a problem – everyone, including hedge funds, are loaded to the gills with these magnificent names.

All equity inflows have essentially gone into Technology (XLK) and nothing else. 

Tide Lifts Boats 

I know many are going to point to solid performance from Utilities (XLU) and Energy (XLE), and the fact only two sectors are down year to date. 

The problem is these gains do little to move the broad market.

Moreover, they have been more narrative driven than based on fundamentals.  

Equal Pain 

The S&P 500 equal weight ETF has plunged against cap weighted.  This is unfortunate since this became the popular trade a couple months ago when most agreed the highflyers needed a breather. 

So, today’s session begins lower with the fear and greed index stuck in the middle. 

Comments

Too Much AI Hype? I don't think of "hype". I see a lot of artificial intelligence everyday in DC and within the Beltway. Bill Frohberg on 5/29/2024 10:43:57 AM

Anyone reading NVDA's CEO comments last week and not seeing that this new era is just getting started lacks the analytical ability necessary to grasp visionary change IMHO. C. Raymond Weldon on 5/29/2024 11:12:22 AM

While I believe Artificial Intelligence exhibited utilizing computers is real, it is also in its inception. it's like the discovery of the transistor in 1956 by Bardeen, Brattain, and Shockley. The hype that followed was SUBSTANTIAL!! (Yea...I was alive then). If we use AI as it relates to computer systems and use the Wikipedia definition of intelligence, then I would suggest we have just begun a very long journey with a single step or two. ie Mostly Hype. But what a great journey it will be - Hold On Losely, but Don't let Go. Lewis W.Gloss on 6/8/2024 7:56:06 PM

The Hype is real. The deciding factor is which company provides the best economies of scale. Highest production and profit with the least capital employed. Of course , who has the best picks and shovels. Matt on 6/13/2024 1:05:10 PM

While it has benefits in certain aeries, just way too much trust around it being the fix all across the board at this point. I find the mention of A.I. in corporate reports mostly meaningless, unless they can specifically explain in technical detail of how they plan to use it and limiting it too their business functions/production. Hope that makes sense? Terry Dowler on 6/20/2024 12:40:10 PM

Ai is in it's early dot.com phase. The magnitude, in my opinion, includes new supporting opportunities for enhancing point of sale systems, portable micro-nuclear power generation, Starlink communications, pharmaceuticals and therapeutics, transportation, ,etc. There are many new start up companies entering the race which will eventually lead to IPO opportunities, more mergers and acquisitions, etc.Ai is fueling our economy right now and it is heating up! Don Seehausen on 6/26/2024 11:08:40 AM

Basic Economic Equation, Income=Expense+Savings+Investment. If government takes 1/2 of your expense and spends it, income does not increase. If government borrows 1/2 of your money in savings income does not increase. You have more interest that takes from your expense. Income does not increase but money is wasted. Patrick McMahon on 6/27/2024 11:58:15 AM

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