Market Rotation, Economic Warning Signals, and Fed Independence in Focus

Key Takeaways

1. Market breadth widens: two-thirds of S&P 500 stocks beat the index, equal-weight S&P 500 outperforms Mag7, and small-cap breadth far exceeds Nasdaq 100.
2. Real personal spending has exceeded real disposable income for 23 straight months (matching 1977 record), while the unemployment rate has risen 0.9pp on a rolling 3-year basis—historically never occurred without a recession.
3. Supreme Court blocks immediate firing of Fed Governor Lisa Cook, reinforcing central bank independence.
4. U.S. sports betting volume hit $165 billion in 2025, surpassing movies, books, concerts, and live sports tickets combined.
5. Raoul Pal launches a first-of-its-kind AI on Real Vision trained on his decade of macroeconomic and crypto thinking.
6. Retail trading volume hit a record over the past month, yet investors hold record amounts of cash.

1. Market Breadth and Sector Rotation

1. Two-thirds of S&P 500 constituents are outperforming the index itself. Non-profitable stocks in the Russell 2000 surged relative to profitable ones earlier this year but have now reversed, with profitable stocks taking the lead. — via 1 2
2. The equal-weight S&P 500 has significantly outperformed the Magnificent 7 over the past few months (Mag7 down ~8%). The healthcare equal-weight sector hit an all-time high, and the NYSE cumulative advance-decline line also reached a new high. YTD, the percentage of Russell 2000 stocks above their 200-day moving average is far better than that of the Nasdaq 100. — via 1 2 3 4
3. Defensive sectors are pushing up the percentage of stocks at 4-week and 52-week highs. Multiple market breadth and sector performance charts updated. — via 1 2 3 4 5

2. Macroeconomic Contradictions and Warning Signals

1. The Dallas Fed manufacturing index slowed to 0.0 in June, below expectations, with declines in new orders, production, and shipments, though employment and wages rose. — via 1
2. Real personal spending has exceeded real disposable income year-over-year for 23 consecutive months, matching the 1977 record. Meanwhile, the unemployment rate has risen 0.9 percentage points on a rolling 3-year basis, a magnitude that has never occurred historically without a recession. — via 1 2
3. Retail trading volume hit a record in the past month, yet investors continue to hold large amounts of cash, according to Citadel Securities. — via 1

3. Other Key Signals: Fed Independence, Sports Betting, AI, and Geopolitics

1. The Supreme Court ruled to block the president from immediately firing Federal Reserve Board Governor Lisa Cook, upholding central bank independence. — via 1
2. U.S. sports betting handle reached $165 billion in 2025, surpassing the combined total of movies, books, concerts, and live sports tickets. Historical growth from $6.6 billion in 2018 to $165 billion in 2025. — via 1 2 3
3. Raoul Pal launched an AI on Real Vision trained on his decade of macro, crypto, and exponential age thinking, claiming it is the first of its kind. — via 1
4. U.S. and Iran reached a provisional agreement to pause hostilities, with talks scheduled later this week. — via 1
5. Independent bookstore count in the U.S. has grown 70% since 2020, with 422 new stores in 2025; Barnes & Noble is also expanding. — via 1