US EQUITIES COLOR ON THE WEEK

Risk off into the weekend with Momentum / Semis / AI under pressure while short pockets outperformed amidst some marginal relief in rates and oil. On the week, Asset Mgrs finished net sellers while HF flows were ~flat. We've seen some waves of risk reduction across semis / memory / AI predominately driven by LO community but overall activity remains tame. Thematically, very little appetite to defend tech pockets as the macro backdrop continues to get tougher for risk + Tech Earnings have largely failed to be the stabilizing force many had hoped for (ASML, TSM, TXN, GOOGL, MXL, INTC, BE Semi all lower on beats/raises over last 2 weeks). Elsewhere, we saw an uptick it HF demand to end the week in Hcare pockets following better earnings (EW and THC) and biotech broadly.

Next week: S&P implied move through next Friday (7/31) is 1.82% with 34% of S&P reporting: MSFT + META (Wed) + AAPL + AMZN (Thurs) + macro: FOMC (Wed), US PCE for June (Thurs), US GDP for Q2 (Thurs), China’s NBS PMIs (Thurs night), BOJ decision (Thurs night), and the Eurozone CPI for Jul (Fri).

Prime: US L/S Gross leverage fell -0.7 pts to 204.2% (6th percentile one-year), while US L/S Net leverage rose +0.5 pts to 51.7% (22nd percentile one-year).

US equities were marginally net bought, driven by long buys & short covers in Single Stocks offset by short sales in Macro Products. 9 of 11 sectors were net bought, led by TMT/Healthcare/Real Estate, while Consumer Disc and Staples were net sold. Amid increased hostilities in the middle east and higher oil prices, HFs net bought Energy stocks for a 6th straight week and sector weighting vs. R3K is ~5-year highs, while Staples and Consumer Disc were both among the most net sold in the past month where net exposures are near their respective three-year lows.

A Weekly Mark-to-Market on Each Sector - TY Trading & Sector Specialists

TECH: NDX down ~170 bps on the week (Semis unchanged vs Mag 7 down ~6% on the week) as exhaustion levels continue to pick up as Factor vol remains elevated and the NDX now sits ~8% below June highs (albeit still +11% YTD). As uncertainty levels increased around the broader macro picture (Geopolitical escalation in Middle East = US 10yr Yields nears ~4.7%, Oil towards $100/ barrel & VIX higher), a lot of debate this week centered around determining whether the Macro or Micro landscape has been the larger driver of price action (e.g is this a risk / market backdrop issue or an idio AI / Capex issue -- or, a bit of both). On the Micro, AI / Semi results remains strong – though, price action has left something to be desired (think: beat-and-fade outcomes) creating some tension ahead of another week of earnings (MSFT, META, QCOM, ARM, AAPL & AMZN). Finally, worth noting the more defensive rotation exiting the week – AAPL o/p the NDX by ~470 bps on Friday (a top 5 day in the last 5 years) and AT&T had its biggest week of o/p vs the market since 2001. (ty Alex Joseph)

ENERGY: EPS kicked off this week for the group - and there was a ton of dispersion in the OFS complex. HAL (desk positioning score of 9/10 into the print) missed expectations on 3Q guide - where more folks were focused on a less bullish NAM outlook despite taking mkt share

internationally from peers. Meanwhile in International - WFRD outperformed into EPS - with most specialists seeing the guidance ranges (3Q + FY) as achievable and remain focused on International (LATAM + ME) growth opps. Next week we will get a handful of Refining prints - where more specialist conversations highlighting willingness to fade the group after YTD o/p. Worth noting the prints expected to be broadly strong and revisions keep tracking higher. – TY Adam Wijaya