TOPIX and SPCX Leaking...
- Marc Bentin
- Jul 20
- 7 min read
BentinPartner Weekly
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Please find below our latest Weekly Trend Report.
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Marc Bentin,
Bentinpartner GmbH
US stocks finished the week softer but not nearly as bad as Taiwan’s and Japan major index, down respectively 6.5% and 4.0%, still leaving indices and especially the tech heavy Nasdaq nursing losses for the week with multiple signs of bubbles faltering.
After trading as high as $225 and being IPOed at $135 a share a week earlier, SPCX closed the week well below the IPO level at $124, leaving many late investors, now deep in losses.
While this was in itself, a rather ominous development, it was by no means the end of the list of worries that emerged last week.
A serious curve ball hit the AI narrative with Chinese AI startup Moonshot AI stunning developers on Thursday with a massive new model that may rival the best American systems at a fraction of the cost (triggering concerns about a looming Deepseek 2.0 moment), Axios reported. This was just a reality check for some still doubting that Chinese is actually zeroing in on the perceived US advance in the AI battle.
This immediately built some pressure on hyperscalers’ debt buildup (which committed to trillions of capital spending) as much as their equity price in the latter part of the week.
Not everything was bad news last week as banks reported stellar earnings to start the reporting season after JPMorgan, Goldman, BoA, Citi and Wells Fargo collectively earned more than $49bn, a 39% jump from a year ago and above expectations. That said, a lot of that was linked to red hot stock markets fueling retail speculation (retail trading jumped 68% above its record high over the last quarter, according to Bloomberg) and generous fees collected from the hyperscalers’ corporate debt bonanza and booming IPO fees (+70% on the quarter).
When it comes to try figure out when the correction of the Ai Momentum trade might be nearing completion, it will have to match with a deleveraging of some sort which ETF equity flows reported last week did not suggest had even started.
On the policy side, Fed Chair Warsh first Congressional testimonies went off very well, promising that “if we get policy right, and I can assure you we will, the inflation surge of the last five years will be a thing of the past.”
“ …I like interest rates as the dominant ways to make monetary policy, and I’d prefer all the things being equal to use balance sheets when the crises are real.”
This is if the Fed can deliver on its mandate, left unconstrained by market forces. We’ll have to check him on that at a later stage but for now, he holds the benefit of the doubt.
When asked by Representative Ritchie Torres “Quantitative easing. Do you believe quantitative easing is inherently inflationary? Yes or no, and then...”, Warsh responded: “That question I can answer simply. I don’t think it’s inherently inflationary, especially if we adopt quantitative easing in the depths of a crisis. It can often provide liquidity to markets that need it.”
At the minimum the tool remains in the toolbox.
On the economic side, US CPI (and later PPI) posted its biggest decline in more than six years in June (CPI fell a seasonally adjusted 0.4% for the month, bringing the annual inflation rate down to 3.5%), as a swift drop in energy prices in June provided relief from this year’s inflation surge… allowing equity markets to briefly rally early last week. The recent 15% recovery in oil prices will likely make this improvement temporary…
At the same time, jobless claims fell last week to the lowest level in 10 weeks as U.S. layoffs remained historically low.
Still, US bonds closed roughly stable last week (while US high yield spread gained 5bps on the week as stocks weakened) while EU bonds fared more poorly with 10Y Bunds and BTPs climbing respectively by 6 and 14 bps to 3.13% and 3.95% respectively.
Over the past week, the dollar dropped marginally (by 0.2%) although JPY dropped another -0.4%.
Commodities stood out last week, supported by WTI gaining 15% but not in isolation as wheat also surged 8% last week (+35% YTD).
Adverse equity market developments (and mirror like gains in commodities) were in part also related to Geopolitical developments taking a turn for much worse as renewed US bombing of civil and military infrastructure was met by Iran on Friday hitting a power and water desalination plant in Kuwait, damaging one of the key sources of drinking water in the country. Attacks included Qatar, a mediator in the war.
Then, Iran-backed Houthis in Yemen also fired ballistic missiles and drones on Saudi Arabia, threatening to draw the rebels into the wider regional conflict, exposing risks to the Suez Canal access as well and posing a potent new threat to global energy supplies.
Renewed hostilities between the US and Iran have caused shipping traffic in the SoH to slow to nearly a halt, the NYT reported as companies now also avoid using the US military-guided transit scheme through the SoH following a wave of Iranian attacks on vessels.
Separately, the WSJ reported that the US is “tapping in to its national stocks of crude with abandon and that withdrawals are taking a toll on the strategic reserve system”.
With European gas prices having jumped more than 70% since the war started, gas storage sites across the EU are now about 52% full, while injection rates are running below last year’s pace and the 10-year summer average, leaving ‘Europe on track to enter winter with its lowest gas storage buffer since the 2022 energy crisis,’ said analysts also cited by the WSJ.
As the political situation in which D. Trump has set himself into increasingly looks as inextricable as the situation in the Middle East, during a prime tim address last week, US President Donald Trump launched a sharp attack on China…, accusing Beijing of interfering in US elections in a move that has strained a fragile thaw in ties and cast doubt on future high-level engagements, the South China Morning Post reported.
Over the past week, the S&P500 dropped -1,5% (9,0% YTD) while the Nasdaq100 sold off by -4,2% (13,2% YTD, Z-score -2,1). The US small cap index dropped -0,7% (19,5% YTD). AAPL rallied 5,8% (22,8%).
The Equally Weighed SP500 dropped -0,4% (11,4% YTD), outperforming the S&P500 by 1,1%. The median SP500 YTD return closed the week at 8,5%.
Cboe Volatility Index rallied 24,9% (25,6% YTD) to 18,77.
The Eurostoxx50 dropped -0,6% (9,7%), outperforming the S&P500 by 0,9%.
Diversified EM equities (VWO) sold off by -3,4% (7,6%, Z-score -2,0), underperforming the S&P500 by -1,9%.
The Dollar DXY Index (UUP) measuring the USD performance vs. other G7 currencies dropped -0,2% (4,8%) while the MSCI EM currency index (measuring the performance of EM currencies vs. the USD) gained 0,1% (0,8%).
10Y US Treasuries rallied -1bps (38bps) to 4,55%. 10Y Bunds climbed 6bps (27bps) to 3,13%. 10Y Italian BTPs underperformed rising 14bps (39bps) to 3,95%, underperforming Bunds by 8bps.
10Y French OAT's underperformed rising 10bps (36bps) to 3,93%, underperforming Bunds by 4bps.
US High Yield (HY) Average Spread over Treasuries climbed 5bps (2bps) to 2,68%. US Investment Grade Average OAS climbed 2bps (2bps) to 0,86%.
In European credit markets, EUR 5Y Senior Financial Spread climbed 2bps (2bps, Z-score 2,3) to 0,56%.
Gold sold off by -2,5% (-7,0%) while Silver sold off by -6,6% (-22,0%). Major Gold Mines (GDX) sold off by -5,6% (-16,8%).
Goldman Sachs Commodity Index rallied 5,3% (29,6%). WTI Crude rallied 15,5% (43,7%, Z-score 2,2).
Overnight in Asia…
S&P future +13 points; Hong Kong +2.0%; China +1.5%
Nothing to report on US futures overnight (except for a 2% gain in oil prices which ultimately cannot be printed). As predictable as could be perhaps… with traders more focused on the Soccer World Cup Final perhaps …and where the hand of God would lean this time.
Alibaba gained 5.4% this morning after the company launched a preview version of its flagship Qwen3.8 Max model, describing it as second only to Anthropic PBC’s Fable 5.
DeepSeek is planning an IPO in 2027 even while seeking a second round of capital from investors, giving it a bigger war chest to develop AI services and offer them globally at prices far below US rivals, Bloomberg reported.
Moonshot AI released Kimi K3, a model that outperforms all rivals except for Anthropic’s Claude Fable 5 and OpenAI’s GPT-5.6 on overall capability. The release of Kimi K3 has stunned some AI watchers and investors, fueling concerns about whether the immense spending commitments from Silicon Valley will pay off and shaken confidence in the US lead, Bloomberg also reported.
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