US EQUITIES COLOR MO' PRESSURE

S&P +2bps closing @ 7,413 w/ a MOC of $1.5bn to BUY. NDX -32bps @ 28,039, R2K +66bps 2,949, and Dow +51bps @ 52,209. 15.849bn shares traded across all US equity exchanges vs ytd daily avg of 19.353bn shares. VIX +81bps @ 18.73, WTI Crude -820bps @ $81.99, US 10YR - 0.030bps @ 4.6467%, gold +73bps @ 4,082, dxy +4bps @ 101.51 and Bitcoin +55bps @ $64,941

Continued unwindy price action to start the week with pressure on Momentum Factor -7%. Lots of under-surface dispersion with a clear "gross down" feel against a poor liquidity backdrop (Software/Internet +4% vs. Semis -3.5%) and most popular Longs within Semis hit the hardest (AMD -6%, SNDK -13%, Semicap Equip -5% to -7% all stood out). Fundamental concerns cited locally today: 1) NVDA OpenAI deal reigniting the "circular financing" debate; 2) Information story that China begins making homegrown DUV chipmaking tools; 3) Lingering concerns around cheaper Chinese open source models (Kimi K3 etc) which have gained global popularity (TY Bartlett)

Fundamental L/S HFs are down 4.5% in July (2nd worst monthly perf since 2023), yet still up 13% YTD. A lot of questions pouring in on what we are seeing during today’s market reversal driven by leg lower in momentum (again). L/S gross exposure stands in the 6th pctl (204.2) on a 1yr lookback; Net exposure stands in the 22nd percentile (51.7) on 1yr lookback. GS Sentiment Indicator sits at 0.6 which is the lowest level in 5 weeks

Our floor was a 3 on a 1-10 scale in terms of overall activity levels, finishing -438bps for sale vs a 30-day avg of -30bps. Very little defense today as most sitting on hands through Fed wed (35% chance of hike) / big earnings slate with META, MSFT, AAPL, AMZN wed-thur / choppy macro backdrop. Thematically, HFs have been sporadically cutting single stock risk (again) while L/Os very quiet.

POST BELL: CDNS +1% headline beat/raise print // FFIV +2% AHs headline beat/raise print (FY EPS raised by ~5%) led by Systems acceleration (vs Software decel to HSDs y/y) // NE ~flat Narrows FY Total Rev forecast // BSX -74bps announcing a restructuring plan to optimize supply chain and organizational restructuring, the plans expects some headcount reductions, Plans expected to be completed by end of 2029

DERIVS: Main story on the day was the positioning driven momentum unwind, ushering a quick selloff within the first hour. Flows wise, the vol desk was muted as clients await major earnings and the FOMC meeting later this week. In general, we’ve seen a choppier equities tape recently, as the market digests an unwinding of the momentum trade, earnings reports, and a resurgence of Iran headlines. Short-dated skew has gotten meaningfully bid, particularly in RUT (currently outperforming SPX and NDX on the year), which is at risk of a larger pullback if the Fed decides to hike. The desk likes buying IWM 31Jul or 7Aug puts as a hedge for a potential hike. The majority of dealer gamma is now to the topside as we trade around the 50d moving average, which should exacerbate any large moves to the downside. The straddle for rest of the week went out at 1.57%. (TY Shayna Peart)

Into this week’s Mag7 prints (TY GS Trading):

META: reports Wed // implied move into the print is 5.5% // positioning is a 6.5 out of 10 with stock down 8.85% YTD. Investors expect solid Revenue trends, with focus on visibility into capex/opex and product roadmap into 2027+

MSFT: reports Wed // implied move into the print is 6.3% // positioning is a 5 out of 10 with stock -19.3% YTD. Bar feels low here, with focus on whether management can effect narrative- shift. On numbers, eyes on Azure growth on quarter/guide (expectations in low-40s) and M365 growth

AAPL: reports Thurs // implied move into the print is 3.3% // positioning is a 7.5 out of 10 with stock +24% YTD. Investors expect a beat and guide above with focus on Services Revs and GM outlook (especially given input cost headwinds)

AMZN: reports Thurs // implied move into the print is 6.3% // positioning is a 7.5 out of 10 with stock +0.49% YTD. Focus on AWS growth (mostly hear low/mid-30s range), as well as margins and 3Q OI guide