How should we now define 'the market'?/Hopefully some reconciliation coming/Other notable stuff

You've got to hand it to French politics that the desire of keeping out Marine Le Pen's 'far right' (as referred to by many) party ended up electing more 'far left.' Strictly from an economic perspective the latter is worse than the former because of its anti-business belief in socialism (and whose leader is a blatant anti-Semite) but because Macron's party did better than feared, gridlock and/or political paralysis is being celebrated, albeit barely as the CAC 40 is up about .25% and oat yields are little changed as is the euro. 

I'll leave the extreme bifurcated action in the stock market to the technicians as for what it means but it does to an extent match the divergences in the economy as well. As we prep for earnings, I would like to see some fundamental reconciliations. Meaning, if there is a portion of the US population that is buying more fountain soda rather than buying bottles/cans out of the fridge at a Casey's General Store in order to save some money, to use as an example of a crimped budget, and reflecting a 'choiceful' consumer as stated by the CFO of Walmart for multiple quarters now, are they going to buy the new Apple iphone with Apple Intelligence features or just keep their current one because the upgrade is not yet worth it? Is Amazon's retail business going to continue to grow quickly? 

Also, we see many of the stocks in the Russell 2000 and the Mid Cap 400 that can't get out of their own way and if the business fundamentals substantiate that poor performance are these companies going to continue to robustly spend on advertising on Facebook, Instagram and Google? If job growth continues to slow, is Microsoft going to be able to keep up its growth rate selling Office 365 seats and hoped for Copilot subscriptions? 

Also, the massive AI spend for many of these big companies is a HUGE expense, as we know, and if capitalized, they will experience much higher depreciation expenses for years to come. Outside of a few infrastructure beneficiaries like Nvidia, Broadcom, AMD, Dell, etc... and Copilot from Microsoft, where is the AI revenue coming from now?

As we all breathe the same economic air, I believe these questions should be asked by all of us and luckily we'll get some answers in the coming month. Lastly, if people are getting excited that the Fed is possibly closer to cutting interest rates, why aren't smaller company stocks doing better as they would most benefit via a lower cost of capital? Divergences and inconsistencies indeed.

As for stock market sentiment, it is getting even more extreme when seeing the Citi Panic/Euphoria index and Investors Intelligence survey. The former hit a new high dating back to 2021 at .46. The Bull/Bear spread in the Investors Intelligence survey is now 46.1 pts where I consider above 40 an extreme read. Bulls rose to 63.1 and Bears fell to 16.9 from 61.5 and 18.5 respectively. Also of note, and thanks to my friend Helene Meisler, the National Association of Active Investment Managers shows a print over 100%, reflecting the upper end of long exposure. And there is a 15.6 pt spread between Bulls and Bears in the AAII data as of last Wednesday, though that is down a touch w/o/w. 

Bottom line, the Bulls have been right on the very big stocks, of course driving the big indices, and the Bears have been right on the mid to smaller stocks. 

This was a funny quip, which my friend Randy Forsyth mentioned in his weekly 'Up and Down Wall Street' piece in Barron's. He cited what Piper Sandler "strategists on Wednesday wrote in a report that they were 'Dropping Coverage of the S&P 500'...Their more serious point, they wrote in a client note, is that the large influence of these few stocks means the S&P 500 no longer represents 'the market.'