/ June 22 / Weekly Preview
Video above is especially relevant for those of you new here!
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Monday:
N/A
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Tuesday:
ADP Employment Change Weekly
S&P Global Services PMI Flash
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Wednesday:
New Home Sales (0.64M exp.)
Fed Bank Stress Test Results
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Thursday:
Core PCE Price Index MoM (0.3% exp.)
Durable Goods Orders MoM (-4.7% exp.)
Personal Income MoM (0.4% exp.)
Personal Spending MoM (0.6% exp.)
Initial Jobless Claims (232K exp.)
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Friday:
N/A
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Monday:
N/A
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Tuesday:
FedEx Corporation
Carnival Corporation Ltd.
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Wednesday:
Micron Technology, Inc.
Paychex, Inc.
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Thursday:
Darden Restaurants, Inc.
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Friday:
N/A
The Fed Ends Forward Guidance
We will be on an editorial break during the period 29.06 - 03.07. Our Daily Briefings will be more concise and the Weekly Preview will resume on 06.07.
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The past week delivered a hawkish regime change at the Fed and the largest options expirations event in history. All told, the market held up remarkably well with Factors such as Momentum (+6.4%) and Growth (+2.6%) managing to handily outperform SPY.
All major indices finished in the green as well, with small caps confirming the advance (IWM was up +2%). The path was somewhat uneven. Monday saw a surge, where the Nasdaq gained +3%, as the US and Iran announced an end to hostilities. Much of that was handed back on Wednesday, as Kevin Warsh led his first meeting as Fed Chair and dropped forward guidance from the Fed’s communications toolkit. According to the still published “dot plot”, 9 out of 18 officials are now penciling in a rate hike this year.
Thursday was the largest OPEX day on record, featuring a quadruple-witching expiration. Chips and cyclicals firmed, and the indices closed the holiday-shortened week higher. The dollar also gained, courtesy of the hawkish tone from mr. Warsh. Gold underperformed, sapped by a firmer dollar and higher yields. Commodities tanked -4%, as the geopolitical premium continues to unwind and gas pump prices come down from the highs recorded in March.
However, maybe it would be best to focus on what didn’t happen. The VIX did not increase, for instance, despite the Fed turning hawkish (there was only a brief pop on the decision). Small caps didn’t lag despite leadership from tech & momentum stocks — and despite being more “economically sensitive” and vulnerable to Fed hawkishness.
A market that keeps composure during a rate increase cycle, with lower volatility and high participation is a confident one. SPY’s continued buying regime confirms that.
The market now sits just -1.4% below the June 2 record highs, with SPY consolidating around the 20-DMA. Resistance stands at $756 (R1), a level that needs to be cleared convincingly before any leg higher can materialize. The trend structure is constructive: the 50-DMA is rising and it was able to absorb the -4.5% dip earlier in the month. The medium term stochastic indicator is showing 76/100, an optimistic reading that has room to run higher.
The only fly in the ointment remains a negative MACD signal, a leftover from the previous pullback.
Thursday’s roughly $8.3 trillion quadruple-witching expiration — the largest ever — removed a large chunk of gamma, making the market more sensitive to month- and quarter-end flows. Retail demand is at record levels, a buy-the-dip response persists while the VIX remains in the mid-teens, and one of the year’s strongest seasonal windows is opening as July’s allocation cycle begins.
SPY’s Dark Pools index was 73% on Thursday (notably high), pushing the weekly index to 57% as institutional accumulation gathers pace (at 60% on the weekly index, a 1-month buy signal triggers, so we are not far from that). GEX is just a tad negative in the short term, but positive overall.
Citadel Securities’ Scott Rubner notes:
May shattered previous activity records in cash equities, surpassing the prior monthly high set in January 2021 by more than 10%. Retail cash equity volumes ran 60% above the 2025 average and more than twice the 2024 average. From this peak, activity has accelerated further in June, with volumes this month tracking 9% above May’s record. Nine of the ten largest retail trading days ever observed on our platform have occurred in just the last month, including seven during the first half of June alone. Friday (June 12) marked the largest single day of retail net buying in our dataset, surpassing the previous record by 50%.
With the Enterprise strategy fully allocated to risk assets (+80% of portfolio NAV) and no sell signals triggered lately, the path of least resistance for stock prices is up.
In terms of risks, we do have to mind the Fed’s more concise communication style. With the roadmap gone (no more forward guidance), the data itself will start to carry much more weight.
On Thursday, June 25, the Bureau of Economic Analysis will publish the May PCE price index alongside the third and final estimate of Q1 GDP. The PCE is the Fed’s preferred inflation measure and the first to be evaluated under Warsh’s new framework. April’s readings were elevated, with headline at 3.8% and core at 3.3%. Wells Fargo projects May headline PCE will rise to about 4.1% due to energy costs, while core PCE is expected near 3.4%.
A hotter-than-expected print would strengthen the case for a rate hike, but much of the headline move reflects high oil prices—an element the Fed cannot address with rate policy. Core inflation is therefore the more important metric. With oil prices having fallen, markets are likely to look through the headline print.
Micron’s earnings report on Wednesday evening is the other marquee event. Any cautious reading on AI memory demand will likely dent the parabolic rise of the sector. Carnival, Paychex, Jefferies and FedEx earnings round out the calendar.
Investor sentiment is on the bearish side of Neutral, which is also supportive of a higher path for equities as June wraps up.
The end of the Fed’s forward guidance does warrant some attention on our side though. Kevin Warsh left rates unchanged but made a more consequential decision than we had anticipated: he fundamentally shifted the way the Fed communicates. The FOMC statement contained just 130 words, down from 300+ in recent meetings.
Warsh described the previous wording as “not well suited for the current policy conjuncture.” The revised statement aims to present the facts as accurately as the committee can assess them. He chose not to add his own dot to the projection chart. Most notably, he announced five new task forces that will examine the Fed’s communications, balance sheet, operations, data sources, and the drivers of inflation. He summarized his decision as follows:
“Financial market prices are probably the most important source of information to guide central bankers. But when all the financial markets are doing is reflecting back what we’ve said, we’re taking the most important source of information and we’re being blind to it.” — Kevin Warsh, June 17, 2026 FOMC press conference
For investors, this means that risk is being passed on to their portfolios rather than it being contained in the Fed’s language. Since the Fed is no longer telling the market how to price things (and instead becomes reactive to the market), this creates a cost: uncertainty. Howard Marks has made the point for decades that you can’t eliminate uncertainty; you can only decide how to price it.
A guidance driven Fed prices uncertainty for us.
With no guidance, Warsh hands back that task to investors (and investors hate it). Because of that, the range of plausible outcomes widens.
Our Trading Strategy (Sigma Portfolio)
Nothing meaningful will change for now in our portfolio. We remain fully allocated to risk assets, as much as our target allocation allows us to. The shift in the Fed’s communication style will weigh on bonds and equities eventually (and gradually). Economic data points will start to matter a lot more.
Ideally, we would like to benefit from volatility, whenever it occurs. At the moment, we are seeing “upside risk”, especially since markets are not sufficiently stretched and all indicators are pointing in a positive direction.
The Fed put is not gone, but it did get more expensive. As investors, it’s us who are paying the premium. Eventually, we will take profits and shift to a stance where we focus on defense rather than offence. That time is not quite today.
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