The Market Brief

• 🟥 Consumer Sentiment - 10:00am

• 🟥 Inflation Expectations - 10:00am

Tech has driven the S&P 500’s run to new highs this month, with capital rotating into lagging semiconductor and AI-adjacent names as second quarter earnings cleared already elevated bars.

The largest monthly pullback in retail sales in over a year, layered on top of soft CPI and PPI prints earlier in the week, gives the Fed more room to hold back.

Since the start of the month, we’ve been sharing intelligence exclusively to our subscribers that the path of least resistance for the market is higher. Now everyone is trying to chase the rally.

Equities pushed to fresh all time highs after an unchanged month over month PPI print eased worries about a hawkish Fed. The real story of the session was in vol: spot and vol moved up together across the board, an unusual pairing. Fixed strike vols opened higher with spot, then floated in a tight range for the rest of the day. NDX vols reversed yesterday’s crush and outperformed as skew flattened further. With SPX and NDX skew now flat, SPX and QQQ puts screen attractive for a pullback hedge, with VIX call buying keeping vol of vol bid.

Spot and the Sep 7750 strike vol tracked each other almost tick for tick through the session, both cresting just after 10:15, bottoming out into midday, then climbing back together into the 3pm hour.

That kind of sustained positive correlation between spot and vol is the outlier here; a rally of this size usually compresses implied vol rather than lifting it in lockstep with price.