Rise and shine everyone and Happy Monday.

Markets are slightly on edge after last week’s pullback on Thursday and Friday. Nvidia continues to pull back in the pre-market and few of the other Mag 7 stocks are following.

The last few days, all everyone has talked about is how lopsided the positioning has been in the market with breadth becoming extremely narrow, and short interest falling to severely low levels in an overbought market. While we go into the month end, flows are weak after options expiry and month-end rebalancing could bring us some weakness, before we head into July, which is seasonally a strong month.

The bigger story for this week, however, is political.

We have the French elections on Jun 30, and the first US Presidential Debate on Thursday. Both could potentially be market movers. But more than anything, the market is fearful of the outcomes.

Asian markets also remained subdued this morning with Japanese Yen in focus. As the Yen, depreciates, there’s been more chatter around intervention. Japanese officials proclaim they are ready to intervene in the market 24 hours a day, if needed! This is already helping with the USD/JPY moving back below 160.

European markets are gaining some ground again this morning after being oversold last week.

US Equity Futures are marginally higher, although the Nasdaq is still red in the pre-market, as I write this. Futures are being led by the Russell 2000 and then the Dow. With more rate-cut bets in September, traders are looking to add small caps to their portfolios. It’s still early in my opinion.

Commodities are looking slightly better this morning. WTI Crude is still hanging in there above $80/bbl and we’re seeing some signs of life in Gold, Silver. Copper is still pulling back.

We have a few important earnings this week - FedEx, Nike, Walgreens, General Mills, Micron and Paychex. We end the week with the US PCE Inflation data.

Chart of the Day

A good summary from JPM on Data Center Growth and beneficiaries.

Calendars

(news taken from Reuters, FT, Bloomberg; Calendar from Trading Economics)