Macro Monday: Bull Market Restart or Dead Cat Bounce?

The headlines say "new highs." The charts scream "breakout."

But beneath the surface, this market feels like it’s walking on stilts.

From AI mania to rate-cut optimism, investors are leaning hard into risk.

And yet, when you strip out the narratives and run the macro tape in reverse, it raises a question only experienced investors are asking:

🔍 Market Breadth: Looks Strong… Until You Zoom Out

While the S&P 500 hits fresh records, fewer than half its stocks are making new short-term highs.

The equal-weighted S&P has underperformed the cap-weighted version by more than 7% YTD—a classic red flag that leadership is narrowing.

This isn’t a healthy wall of buyers—it’s a narrow staircase built on mega-cap tech.

🏦 Credit Spreads: Widening Quietly

High-yield credit spreads have been ticking higher, even as equities rally.

That divergence typically shows up just before volatility returns.

If companies are paying more to borrow, investors should be asking: what’s the bond market sniffing out that stocks are ignoring?

📊 Real Earnings Yield: Dangerously Low

With the 10-year Treasury near 4.3% and S&P earnings growth slowing, the real earnings yield on equities is hovering near its lowest level since 2007.

Valuations are rich. Forward returns—especially for growth-heavy indices—are now heavily dependent on flawless execution and soft macro landings.

🔁 Is This 2019… or 2021?

The current market environment echoes both:

• In 2019, we saw a pause in tightening and a soft-landing rally.

• In 2021, we saw euphoria, concentration, and a nasty reversal.

Right now, investors need to decide which playbook to follow.

🔑 What Smart Money Is Doing:

• Rebalancing—Not rotating blindly into momentum, but trimming overweights and watching breadth

• Hedging—Using volatility products, deep out-of-the-money puts, and cash as offense, not defense

• Scanning credit and liquidity, not headlines

⏱️ What to Watch This Week

• Tuesday – ISM Manufacturing PMI: Any softening here would support rate-cut expectations but may hit industrials

• Tuesday – Powell Speaks: Expect more “data dependency” talk, which leaves markets vulnerable to surprise CPI spikes

• Thursday – Jobs Report: Still the Fed’s most-watched indicator—wage inflation trends matter more than payrolls

This could be the start of a durable breakout—or a high-altitude setup for disappointment.

Price is telling one story. Macro is whispering another.

Stay alert.
—StocksTrades.AI Newsletter

Disclaimer: This newsletter is for informational purposes only and does not constitute financial advice. Always conduct your own research before making investment decisions.