PonyWang/E+ via Getty Images Listen here or on the go via Apple Podcasts and Spotify Sungarden Investors Club' Rob Isbitts talks again to analysts Julia Ostian, Jack Bowman, and Kenio Fontes (1:00). Buying the dips, market positioning (9:25). Treasury rates and watching institutional investors allocations (11:30). Looking differently at Microsoft and Amazon, preparing for a bear market (17:50). Software, hardware, and AI stock selection (22:10). Yield curve steepening (28:00). Transcript Rob Isbitts: ...

Investment Rating - The report suggests a long position in UST duration at the 5-year key rate and recommends maintaining long positions in UST 3s30s and term SOFR 1y1y vs. 5y5y steepeners ahead of potential range breakouts post-month-end [6][10][41]. Core Insights - The report emphasizes that the performance of the S&P 500 Index often does not accurately predict economic recessions, with historical data showing that in 27% of NBER-declared recessions, the S&P 500 peaked in or after the month the recession began [6][21]. - It highlights the importance of upcoming US labor market data, particularly the May JOLTS and June employment reports, which could significantly influence the yield curve and Treasury yields [18][32]. - The report notes a significant decrease in the US Treasury's cash flow deficit over the past three months, attributed to higher tax revenues, tariff revenues, and reduced government spending [19][29]. Summary by Sections Economic Data and Market Performance - The report argues that investors should focus on economic data rather than the stock market, as historical trends indicate that equity performance often misleads regarding impending recessions [9][11]. - It points out that the S&P 500 Index's performance leading up to recessions has often been misleading, with many instances where the index was near its peak when recessions began [15][21]. Labor Market Insights - The upcoming labor market data is critical, with expectations for total payroll growth of 140,000, which aligns with recent trends but contrasts with rising unemployment claims [32][36]. - The report suggests that the labor market data could catalyze a repricing of risks in the US rates market, particularly if the data indicates downside risks [30][41]. Treasury Financing Needs - The report discusses the US Treasury's financing needs, noting a significant reduction in the cash flow deficit, which fell to $111 billion over a recent 63-day period, down 75% from the previous year [29][30]. - It highlights that tariff revenues have played a significant role in reducing the cash flow deficit, with annualized tariff revenue reaching $323.9 billion, or 1.1% of nominal GDP, a notable increase from historical averages [25][26].