Zeitgeist: Buffett indicator at all-time highs, market breadth all-time lows...how is this not a bubble?

Participation in the breakout of the S&P 500 is historically low with extreme concentration in tech stocks doing all the work. Ten companies make up ~38% of the S&P 500's market cap and 30% of its profits, historically extreme. Bull market hits July – no negative returns for the month in a decade. Key risk events ahead – tariff deadline July 9th and then onto earnings season (KO July 15th).

No taxation without representation: Americans have been vexed about tax for 250 years – it's why the whole party kicked off in Boston. So you would think that locking in massive tax cuts will be cheered. Trump has won a massive victory – as I said last year, the most consequential president in a generation. Breadth improving as small cap Russell 2k and Nasdaq both rallied 1% and the Dow +0.77%.

Trump’s tax bill cleared its final hurdle in Congress – animal spirits are here. The nonfarm payrolls was a positive heading into the July 4th holiday as well. In the UK, the PM and Chancellor put on a show of unity to calm markets, nudging gilt yields down and the pound higher.

The S&P 500 notched a fresh record high as tech led, rallying 0.83% after a jobs report showed the US economy continuing to defy expectations. European shares edged higher, with the STOXX 600 +0.4%, DAX +0.61%, and CAC 40 +0.21%. Gains were led by semiconductor stocks after the US eased chip design export restrictions to China. The FTSE 100 rebounded 0.55% after a decent services PMI report.
Without any US steer European indices are trading down today with the FTSE 100 down a quarter of a percent and the Cac and Dax even lower with US futures also softer but not too much to dwell on given it's a holiday....maybe trade worries with Trump talking about sending letters to countries setting unilateral tariffs.

Again, the US labour market defied expectations with a very strong June print. Nonfarm payrolls rose by 147,000 last month ahead of expectations for around 110,000 and the upwardly revised 144,000 in May. The unemployment rate fell to 4.1% vs 4.3% expected. Whilst we cannot rely entirely on the data the BLS is providing it does signal that hiring remains relatively robust in the US. Looks like September is the earliest we can expect to see the Fed cut – but is the market looking at this or when Trump’s low-rates guy is installed?

Finally – the July 9th tariff deadline is ahead but the market isn’t worried about this – the direction of travel since April has only been positive but we could yet see some surprises. Trump said Thursday the administration would start sending out letters today setting unilateral tariff rates. Only China (sort of), Vietnam and UK have signed deals so far...tail risk is reignition of trade war.