It has been another ugly session for tech stocks and the Mag 7 in particular, with much of the skittish sentiment attributable to nerves surrounding today's Microsoft earnings after the bell, after TSLA and GOOGL last week were a disappointment.
And indeed, as UBS trader Torsten Sippel writes, while focus over the past 24 hours seemed to have finally shifted to Micro, there is clearly still a macro/positioning/technical angle that is impacting broader markets. To wit, "there are just too many unexplained dislocations with evidence of pain on the long and short side" and - as we reported last night - billions more in Systematic degrossing as well despite the official end of the buyback blackout window. There is a fair amount of dispersion below the surface again as Tech underperforms while Energy and Financials are outperforming. Looking at Factor moves, Value and Quality are bid. Value is better than Growth by at least 200bp.
In any case, Microsoft tonight will likely not only set the tone for the Mag7s tomorrow but will also dictate the next leg of below the surface action/ dispersion. While Monday felt a bit more risk-on, today there are just too many currents to be sure. There is also the BoJ tonight followed by the FOMC tomorrow. Meanwhile, as we also first reported, and as UBS confirms, the bank's Hedge Fund flow is suggesting that the Long/Short community is getting back on their front foot but as I mentioned above, at the same time there are many dislocations that look very painful (Nvidia, Lumen Technologies, Altice and Warner Bros Discovery just to give some examples).
