DC Lite #162

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1. Rates vs. debt vs. income. "Fewer investors have focused on the inflationary effects of higher income. No other Fed hiking cycle in history occurred while government debt was so large ... interest payments flow to holders of Treasury securities and some portion will be spent."

2. CTAs vs. US equities. "USA CTA positioning is near the max exposure level and highest since 2021."

3. Breadth thrust. NYSE Zweig Breadth Thrust crossed above 0.62 last week. Though not all criteria for a ZBT trigger were met, this was still a rare occurrence, happening just 36 other times in the last 20 years during bull markets. Up 1 year later 97% of the time.

4. Small-cap ETF flows. "The most remarkable 5 days in R2000 history, imho... powered entirely by flows into $IWM. No one even bothered to pick value or growth!"

See: Yes, I give a fig... thoughts on markets from Michael Green

5. Index EPS revisions. "For rotations to sustain, earnings revisions need to inflect for the 'left behind'."