The Market Brief
U.S. futures were near flat early Thursday, following this week's record rally, as investors awaited details on a Middle East peace deal.
Macro Viewpoint
Stocks lacked clear direction as tech shares wobbled, with investors watching US-Iran talks and awaiting Friday’s non-farm payrolls report for signs of a strengthening jobs market and clues on the Fed’s policy path.
The pause in the tech rally reflects a reassessment of AI stock valuations. A strong print would likely fuel expectations of further Fed tightening, while a weak one could ease those bets and take pressure off bond yields.
Prime Intelligence
TMT hedge funds just posted their worst month on record, and the chart says this isn’t a normal drawdown.
July 2026 stands out as the deepest monthly loss in the entire series, a 10.2% drawdown that Pivotal Path’s preliminary data attributes to forced liquidations in semiconductor and memory stocks. Notably, this figure excludes the separate collapse at Situational Awareness, whose assets reportedly fell from $45bn to $10bn in the same period, meaning the pain was broad-based rather than isolated to one fund.
A loss this size raises real questions about how these funds managed concentration and volatility risk heading into July. If it forces them to run smaller, more conservative books going forward, one consequence stands out:
“If this assessment proves correct and the capacity of hedge funds to hold tech exposures is structurally reduced, the tech trade would become over the longer-term even more dependent on retail investors and thus more susceptible to the swings emanating from leveraged ETFs, retail option buying and retail margin accounts.”
The Market Brief
In todays brief we look at how markets are digesting the recent tech selloff and what it means for investor positioning.
We also dig into the earnings backdrop shaping the debate over where stocks go from here.
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