Michael A. Gayed

NeutralSPY000660ADBEBACBTCBZCCLDELLEWJEWYGSIBMIEMGJPMNOWORCLSKHYSNDKUVXYWFC

7/15/2026 on

The Contradiction: Cool CPI, Hot Oil, Korean Bear

A cool June CPI told the Fed to stand down the same week an Iran blockade, a Korean bear, and IBM's worst day ever said otherwise. Today’s Lead-Lag Report post is sponsored by Rayliant Join Me July 16: Smart Beta Construction with Jason Hsu (Rayliant), Fujia Liu & Tony Yang (ChinaAMC) I’m excited to welcome you to my next Lead-Lag Webinar session, sponsored by Rayliant. On Thursday, July 16 at 10:00am ET, I’ll sit down with Jason Hsu, PhD — Founder of Rayliant and one of the leading voices in systematic investing — together with Fujia Liu, CFA and Tony Yang of China Asset Management (ChinaAMC), for a practical conversation on smart beta construction and what it really takes to build better factor exposure. Factor investing is often presented as a clean academic framework: identify a factor, build a portfolio, and harvest a premium. In reality, most of the outcome is driven by construction choices — what you define as the signal, how you neutralize unintended exposures, how you control turnover and trading costs, and how you think about regime dependence. I’ll ask Jason about questions like: ● What does “better factor exposure” actually mean in practice? ● Where do smart beta strategies typically leak risk (and why)? ● How should investors think about factor cyclicality and crowded trades? ● What construction choices matter most: weighting, constraints, rebalancing, or implementation? If you allocate to smart beta ETFs, manage multi-factor portfolios, or build rules-based strategies, this is the kind of conversation that can help you sharpen your framework and avoid common pitfalls. This session is approved for CFP CE credit. If you attend live and want to claim it, I’ll email you after the session with the simple process — I submit your details directly to the CFP Board on your behalf. Seats are limited — register here: https://us06web.zoom.us/webinar/register/WN_qgl8xwwkTMyb3i6BS3myhQ After you register, you’ll get your confirmation and a reminder before we go live. I hope you can join me. — Michael A. Gayed, CFA DISCLAIMER — PLEASE READ: This is sponsored advertising content for which Lead-Lag Publishing, LLC is being paid a fee. The information provided is solely the creation of Rayliant. Lead-Lag Publishing, LLC does not guarantee the accuracy or completeness of the information provided or make any representation as to its quality. All statements and expressions provided are the sole opinion of Rayliant and Lead-Lag Publishing, LLC expressly disclaims any responsibility for action taken in connection with the information provided. The Contradiction: Cool CPI, Hot Oil, Korean Bear Key Highlights ● Cool June CPI (+3.5% headline, +2.6% core) flipped the September FOMC from a coin-toss hike into an 86% hold — precisely the guidance the Warsh Fed refused to give, now handed to it by the tape. ● Oil did not fade: WTI settled +9.42% to $78.14 Monday and pushed near $80 Tuesday as a U.S. naval blockade of Iran took effect at 4pm ET, two days before Friday’s OFAC wind-down deadline. ● The market split in two — IBM’s worst day on record (-25%) against SK Hynix +27%, and a KOSPI now in bear territory after its 7th circuit breaker of 2026 — while the VIX sat at 17.16. Let me lead with the contradiction, because this was a week that refused to resolve into a single story. Seven days ago the thesis here was that a Warsh Fed which declined to guide had left a bifurcated market — cool disinflation on one side, a Hormuz supply shock on the other — to price both risks at once. That premise is now half-resolved and half-detonated. The disinflation side won the argument at the front end: June CPI came in cool, and rate markets took it as permission to stand the Fed down. The supply-shock side, which last week’s iMessage traffic insisted had faded overnight, did no such thing — oil extended its gains into a formal Iran blockade. And in the middle sat the most violent single-stock dispersion event in years. The market did not choose. It split. Start with the tape that matters most for the rate path. June CPI, released Tuesday morning, printed a headline of +3.5% year-over-year and core of +2.6%, both cooler than a consensus that had been drifting toward the high-3s (CBS News; Reuters via KELO). The market’s read was immediate and one-directional: CME FedWatch swung to roughly an 86% probability of a September hold, up sharply from near 60% before the print (CBS News). This is the punchline of the whole Warsh-regime saga. A Fed chair who built his brand on refusing to pre-commit just had the pre-commitment made for him — not by a dot plot he distrusts, but by a single benign inflation number that convinced the market the hike is off the table. The premise of last week’s edition, that the Fed’s silence forced the bond market to do its work, is now moot: the data did the work instead. The banks, reporting the same morning, quietly reinforced the higher-for-longer floor beneath all of this. JPMorgan, Wells Fargo, Bank of America, Citigroup, and Goldman Sachs all beat on EPS — the sector’s eighth consecutive quarter of beats (IG.com). JPMorgan posted $6.14 against $5.85 expected with equities-trading revenue up 86%, and Goldman turned in a record quarter at $20.98 diluted (AP via Audacy; IG.com). Nothing here signals credit stress; resilient banks give the Fed less urgency to cut. Stitch the two Tuesday morning threads together and you get the market’s clean, and I think dangerously tidy, synthesis: banks make money, cool CPI means the Fed doesn’t need to hike, the curve stays flat, and the money rotates hard within tech. Which brings us to the third act — the one that actually moved portfolios (chart 1). Chart 1 — U.S. markets, indexed to January 2, 2026. The SOX’s parabola meets its first real test. IBM had the worst single day in its history on Tuesday, falling roughly 25% after a CEO letter flagged capital expenditure shifting toward memory and servers ahead of a coming wave of price increases — a signal the market read as a tectonic reallocation of AI spend. What followed was pure dispersion: SK Hynix ripped about 27% (Chosun), Dell rose around 7% (The Globe and Mail), Sandisk gained roughly 5% (Benzinga), and cybersecurity broadly traded higher on the same tape, while the software complex — IBM (Reuters/Forbes), Adobe, ServiceNow, Oracle — was crushed. This is not risk-off; it is a wholesale repricing of who captures the next dollar of AI capex. Memory and hardware win, application software loses. It is worth sitting with how strange the composite picture is: the SOX had run parabolic into July, up more than 80% for the year at the Q2 close, yet Monday’s session had already been a semiconductor-led decline masquerading as an oil scare, with SK Hynix down about 15% in Seoul the day before it reversed violently higher (WSJ live coverage). The divergence between the memory complex and the software complex is now the single most important intra-equity story in the market, and the VIX — sitting at 17.16 as of the Jul 13 close (verified via YCharts) — is telling you the index level barely noticed a rotation this large happening beneath it. Across the Pacific, the read-through ran through Japan and Europe rather than around them (chart 2). The Nikkei 225 closed Tuesday around 67,243, off about 1.9%, as the Korean semiconductor shock spilled into Tokyo and a yen pinned near 40-year lows failed to cushion exporters (Japan Market Report, Jul 14). That is a notable pullback from the 70,062 Q2 close and from June’s brush with 70,000 intraday. The dollar side of the story is quieter but structurally supportive: USD/JPY held at 162.44 Tuesday, essentially unchanged and still shy of the 164-165 intervention zone desks are watching, while the DXY held firmly above 101 (Twelve Data; Investing.com). Chart 2 — International developed markets vs. the S&P 500, indexed to January 2, 2026. Europe told the same muted-defensive story. The Stoxx Europe 600 traded near 641, below its July 3 record of 652.77, with the DAX slipping toward 24,950-24,975 intraday and the CAC 40 closing at 8,292.93, down 0.86% (Stoxx official; Boursorama). The ECB, having hiked in June, is deliberately holding — Lagarde told Les Echos it “made the right choice” and cannot yet call a peak (Bloomberg, Jul 2). The net read-through for the dollar is that a hawkish-leaning global backdrop — BoJ still hiking, ECB done-but-not-declaring-victory, a BoE talking tough into its Jul 30 decision — leaves the greenback bid even as U.S. hike odds collapse, because everyone else’s central bank is closer to the end of its road than the market thinks the Fed is. The emerging-market panel is where the bifurcation turns genuinely ugly (chart 3). KOSPI, the single best-performing major index of 2026, triggered its seventh circuit breaker of the year Monday, plunging 8.95% to close at 6,806.93 — its first close below 7,000 since May — then extended lower Tuesday to 6,662.93 (Dong-A Ilbo, Jul 14; Trading Economics, Jul 14). The index is now roughly 20% below its June record and formally in bear-market territory, even as it clings to a gain north of 67% year-to-date (CNBC, Jul 9). Barron’s picked up the “KOSPI problem” framing Tuesday, and for good reason: Samsung and SK Hynix alone are more than half the index’s weight, a concentration with no U.S. parallel (CSIS, Jun 30). This is a capital-flight signal wearing a still-positive YTD number, and the fact that SK Hynix could crater 15% in Seoul on Monday and rip 27% globally on Tuesday’s memory pivot tells you the Korean tape is now a pure derivative of the AI-hardware trade. Chart 3 — Emerging markets vs. the S&P 500, indexed to January 2, 2026. KOSPI’s boom and bear. The rest of the EM complex bent without breaking. India’s Sensex fell 0.72% to 77,054.94 as the oil-import bill reasserted itself and the rupee slid toward the mid-95s (Business Standard, Jul 14). MSCI EM had given back roughly six points of YTD gain to around +20% since the quarter close, yet the JPMorgan EMBI Global Diversified spread sat near 235bp and Argentina’s country risk hit its tightest since 2018 (SSGA Q2 commentary). EM credit is reading the oil shock as a duration and inflation story, not a solvency crisis — which is exactly right, and exactly why the equity pain is concentrated where the AI leverage is, not where the current-account leverage is. Which leaves the shock itself, the one the market keeps insisting will fade (chart 4). It did not. Front-month NYMEX WTI settled Monday up 9.42% to $78.14 and pushed toward $80 Tuesday, its highest in a month, as a U.S. naval blockade of the Iranian coast took formal effect at 4pm ET; Brent settled $83.30 Monday and traded near $85 (GMA/Reuters; Morningstar Data Talk; Straits Times). This is Hormuz Day 137, and Friday brings the OFAC wind-down deadline for the revoked Iranian-oil license — a hard date sitting two sessions past a soothing CPI print. Chart 4 — Dollar, yen, euro, gold, oil, and bitcoin, indexed to January 2, 2026. The tell is in gold. On any historical script, an oil-driven war premium plus a hard geopolitical deadline sends gold ripping. Instead COMEX gold settled down 2.61% Monday to around $3,997 and managed only a shallow bounce to roughly $4,015-4,025 Tuesday (Morningstar Data Talk; Trading Economics). Gold is trading as a rate-and-dollar asset, not a safe haven — the decoupling thesis first flagged here in mid-June, now hardened. Higher oil lifts inflation expectations, which firm the dollar, which pressures gold, inverting the metal’s entire crisis playbook (FX Leaders, Jul 14). Bitcoin, for its part, barely moved — rangebound near $62,700 as it trades on its own ETF-flow dynamics rather than as any kind of hedge (Twelve Data). When the two assets everyone reaches for in a crisis — gold and bitcoin — both shrug at a naval blockade, the market is telling you it does not believe the war premium is durable. In my view that is the market trading on borrowed time: it has priced the CPI relief as permanent and the oil shock as transient, and Friday’s deadline is where those two assumptions collide. What I’m watching next week. First, the Jul 17 OFAC wind-down — does WTI hold near $80 or mean-revert toward the $60 that traders say a reopening would trigger, and does the July CPI (out mid-August) start absorbing an oil premium this June print was too early to see. Second, the durability of the memory-over-software AI divide: is IBM’s worst day a one-session capex scare or the start of a genuine leadership rotation within tech, and does the SOX resume its trend or confirm a top. Third, whether the Korean bear stays contained to a concentrated index or becomes the canary for the entire AI-hardware complex. And underneath all of it, the flattest question of all: with 2s10s at 36bp, the curve is pricing neither a hike nor a recession. One of those complacencies breaks first. The Lead-Lag Report is provided by Lead-Lag Publishing, LLC. All opinions and views mentioned in this report constitute our judgments as of the date of writing and are subject to change at any time. Information within this material is not intended to be used as a primary basis for investment decisions and should also not be construed as advice meeting the particular investment needs of any individual investor. Trading signals produced by the Lead-Lag Report are independent of other services provided by Lead-Lag Publishing, LLC or its affiliates, and positioning of accounts under their management may differ. Please remember that investing involves risk, including loss of principal, and past performance may not be indicative of future results. Lead-Lag Publishing, LLC, its members, officers, directors and employees expressly disclaim all liability in respect to actions taken based on any or all of the information on this writing.

View original →

NeutralSPYIWMXAU

7/15/2026 on

The Rotation Confirmed: Defensive Names Reclaim Leadership, EEM/XLK/Gold Unwind, Risk-Off Signal Accelerates

Today’s Lead-Lag Report post is sponsored by GraniteShares Volatility has been anything but linear this year, and advisors are increasingly asking the same question: how do you generate income when the fixed-income playbook keeps rewriting itself and covered-call yields keep compressing? In that environment, autocallable strategies have moved from a niche structured-product corner of the market into something advisors are actively studying and allocating to — and that’s why I’m sitting down tomorrow with Matt Lamb, CAIA, Portfolio Consultant at GraniteShares , for a live conversation on what these strategies actually do, where they fit, and where they don’t. Register here → https://us06web.zoom.us/webinar/register/WN_0PuKp0TuQtyT2Kiq_lEL7Q What we’ll cover · How autocallable structures actually work — the mechanics behind the yield, in plain English · The tradeoff matrix — autocallables vs. covered calls, buffered ETFs, and traditional fixed income · GraniteShares’ YieldBOOST autocallable lineup , including ANV and TLA · Regime fit — positioning autocallables across different volatility and rate environments · Live Q&A with Matt Lamb The details · When: Tomorrow, Wednesday, July 15 · 2:00–3:00 PM ET · Where: Live Zoom Webinar (registration required) · Cost: Free · CE Credit: CFP Board approved · 1.0 hour — CFP® professionals attending live can earn CE. CFP IDs will be collected post-webinar for batch submission. · Format: 60 minutes, live, with audience Q&A Reserve your spot → https://us06web.zoom.us/webinar/register/WN_0PuKp0TuQtyT2Kiq_lEL7Q Can’t make it live? Register anyway — we’ll send the replay to every registrant. DISCLAIMER — PLEASE READ: This is sponsored advertising content for which Lead-Lag Publishing, LLC is being paid a fee. The information provided is solely the creation of Figure. Lead-Lag Publishing, LLC does not guarantee the accuracy or completeness of the information provided or make any representation as to its quality. All statements and expressions provided are the sole opinion of Figure and Lead-Lag Publishing, LLC expressly disclaims any responsibility for action taken in connection with the information provided. The Rotation Confirmed: Defensive Names Reclaim Leadership, EEM/XLK/Gold Unwind, Risk-Off Signal Accelerates XLU +2.60% 4W ROC (Risk-Off Week 3); XLF +1.0σ Notable; EEM/XLK Flip to Laggard; JNK/GOVT +0.69% Confirms Credit Stable [Sponsor block — insert manually per issue] Below is an assessment of the performance of some of the most important sectors and asset classes relative to each other. 24-ASSET MASTER SUMMARY TABLE (Sorted by |Z-Score|) LEADERS: DEFENSIVE ROTATION IN, EEM/XLK OUT, XLF HOLDS Financials (XLF) — Rotation Beneficiary, Improving/Leading XLF/SPY: +4.05% one-month, +0.26% three-month, -7.38% six-month, -10.75% one-year (Signal strength: +1.01σ — Notable) Financials are the one Run #22 leader that not only held but strengthened to Notable this week. Z-score of +1.0σ means XLF/SPY moved more than one standard deviation above its 52-week weekly typical — statistically the second-strongest signal in the entire 23-ratio universe this week. When a rotation happens, the sectors that lead into it AND lead out of it matter most; XLF is doing both. This is the anchor argument that the current defensive rotation is not a full risk-off but a healthy rebalance. Utilities (XLU) — Defensive Rotation Confirmed, Improving/Leading XLU/SPY: +1.00% one-month, -11.36% three-month, +1.02% six-month, -5.95% one-year (Signal strength: +0.54σ — Weak signal per weekly change, but 4W ROC is the actionable metric here) XLU/SPY 4-Week ROC accelerated to +2.60% this week (up from +0.82% last week), pushing the Framework Check into Risk-Off Week 3 territory. Utilities absolute price is flat-to-up while SPY has drifted; the relative signal is doing the work. This is the third consecutive week the defensive signal has held, and it’s now clearly accelerating rather than fading — the exact opposite of what Run #22 called (fading defensive extreme). Healthcare (XLV) — Flipped to Leader from Run #22 Laggard, Weakening XLV/SPY: +2.44% one-month, -0.44% three-month, -5.75% six-month, -0.47% one-year (Signal strength: +0.38σ — Background) Healthcare flipped from Run #22 laggard to Run #23 leader on a modest +2.44% one-month move. Not a statistically loud signal, but combined with XLU and XLP holding relative bids and the Notable financial rotation, the sector-level story is coherent: defensive leadership is not just utilities-only. Watch XLV RRG in coming weeks — currently Weakening (positive but decelerating momentum). Small Caps (IWM) — Flipped to Leader, Small Cap Participation Emerging, Lagging IWM/SPY: +0.74% one-month, +1.84% three-month, +4.46% six-month, +8.98% one-year (Signal strength: -0.18σ — Background) IWM/SPY is up +0.74% 1M and flipping to leader is one of the more interesting sub-signals this week. Small caps historically underperform in genuine risk-off (they’re more sensitive to credit and growth than SPY). Small caps flipping to leader while credit stays confirming (+0.69% JNK/GOVT) is the strongest evidence that this rotation is defensive-with-quality, not defensive-with-fear. MACRO CONFIRMATION: LUMBER/GOLD REFLATION, JNK/GOVT STABLE JNK/GOVT — Credit Stability, Improving/Leading JNK/GOVT: +0.69% one-month, +1.83% three-month, +1.93% six-month, +3.38% one-year (Signal strength: +0.16σ — Background) Credit is still confirming. JNK/GOVT +0.69% 1M is not loud, but it’s positive across all four horizons — no credit stress despite the equity rotation, no widening spreads, no funding fears. This is the single most important piece of evidence for interpreting the current setup as healthy defensive rotation rather than risk-off recession warning. If this line rolls over to negative next week, that changes. Lumber/Gold — Both Rising Scenario, Weakening Lumber/Gold: +1.95% one-month, +28.17% three-month, +31.13% six-month, -15.51% one-year (Signal strength: +0.47σ — Weak) Lumber/Gold at +5.23% 4-Week ROC. Scenario translation: Both Rising — lumber outpacing gold, gold underperforming SPY significantly (Z=-0.63σ). This is the growth-favoring configuration underneath what looks like defensive rotation on the surface. This is the second key data point supporting a rebalance-not-fear interpretation: the reflation trade is still intact even as the defensive names lead. LAGGARDS: EEM/XLK/GOLD UNWIND, THREE NOTABLE REVERSALS Emerging Markets (EEM) — Notable REVERSAL from Leader, Lagging EEM/SPY: -3.16% one-month, -3.15% three-month, +4.37% six-month, +12.21% one-year (Signal strength: -1.42σ — Notable) EEM/SPY delivered the largest single-week reversal in the universe. Z-score of -1.42σ means EEM underperformed SPY by more than one standard deviation from typical this week. Combined with XLK’s -1.07σ reversal, this is the story: the two Run #22 outsized leaders both had statistically Notable reversals in a single week. If you were positioned into the EEM/XLK leadership thesis after Run #22, this is the tape saying trim, not exit — but the signal to trim is clear. Technology (XLK) — Notable REVERSAL, Lagging XLK/SPY: -0.76% one-month, +15.12% three-month, +15.34% six-month, +17.18% one-year (Signal strength: -1.07σ — Notable) Tech’s Notable reversal is significant because it comes on top of a still-strong 3M/6M reading (+15% both). This means the reversal is happening AT a still-elevated level — not a broken uptrend, but a resistance-level unwind. The 3-year chart shows the ratio near multi-year highs; a Notable weekly Z-reversal here is often the setup for a 2-4 week consolidation, not a regime change. Watch for absolute XLK price weakness alongside the ratio unwind — that’s the difference between rotation and stress. Gold (GLD) — Flipped to Laggard from Run #22 Leader, Recovering GLD/SPY: -5.34% one-month, -24.02% three-month, -18.32% six-month, -0.94% one-year (Signal strength: -0.63σ — Weak) Gold’s flip to laggard is the surprising element of the defensive rotation. Normally when defensive equities rise, gold rises with them. Gold falling on absolute price while defensive equities rise means the market is buying yield-bearing defensive names (utilities) not haven metals. This is another argument for interpreting this as rotation-not-fear: real fear moves gold up too. PREVIOUSLY ON LEADERS-LAGGARDS Run #22 Headline: “The Quiet Unwind: EEM/XLK/Financials Reclaimed Leadership; Defensive Extreme Faded” Reversed hard. Run #22 called EEM/XLK/GLD/XLI as new leaders. Run #23 flips EEM/XLK/GLD back to laggard while XLU/XLV/IWM flip to leader. XLF is the one Run #22 leader that held — and strengthened to Notable. The ‘quiet unwind’ was in fact a one-week bounce, not a regime. Streak tracking: • XLU/SPY: Week 3 of Improving/Leading quadrant (previously Weakening for 4) • XLF/SPY: Week 2 of holding leadership through defensive rotation WHAT WOULD CHANGE MY VIEW • XLF/SPY falls back below +0.5σ by next Friday’s close • JNK/GOVT rolls over to negative 1-month change • XLK/SPY reclaims Notable positive Z on any single day • XLU/SPY 4W ROC decelerates back below +1.0% THE WEEK IN CONTEXT Six ratio flips in seven trading days is not noise — it’s a meaningful regime signal. But context matters: financials held on, credit didn’t break, and small caps flipped from laggard to leader. This is a defensive rotation happening within a still-functional risk-taking backdrop, not a bear-market setup. Watch XLF and JNK/GOVT next week — those two are the difference between healthy rotation and structural stress. And for anyone who over-positioned into the EEM/XLK trade last week (Run #22): the tape just told you to trim, not exit. Disclaimer: The information provided in this article is for informational purposes only and should not be considered financial advice. All investments involve risk. Past performance is not indicative of future results. The Lead-Lag Report is written by Michael A. Gayed, CFA. This does not constitute a recommendation to buy or sell any security. Consult a licensed financial advisor before making investment decisions.

View original →

SPYBullish

7/14/2026 on

The Inflection Point Nobody Wants to Call

As of July 10, 2026, S&P sits 8.8% above its 200-day; SSO kept, defensive signals warn.

View original →

SPYNeutralIWMNeutralQQQBearish

7/13/2026 on

The Fear Gauge Reset — But the Composition Did Not (ATACX)

Utilities outperforming Nasdaq under calm VIX historically precedes renewed volatility

View original →

NeutralSPYNEARUVXY

7/12/2026 on

The Yen at a 52-Week Low and the Setup for a Carry Recompression (JOJO)

FXY closed at 56.95 on July 2 — just 55 cents above its 52-week low of 56.40. The VIX has collapsed. Credit is complacent. The three ingredients of a reverse-carry episode are on the table. KEY HIGHLIGHTS · The Invesco Currency Shares Japanese Yen Trust (FXY, a grantor trust that holds Japanese yen and issues shares designed to track the price of the yen relative to the U.S. dollar, net of expenses) closed at 56.95 on July 2, 2026 — just 55 cents above its 52-week low of 56.40 and firmly at the low end of its 52-week range (56.40 – 63.26).[1] · The VIX collapsed to 16.15 on July 2 — a 27% decline from its June 10 peak of 22.22 and well below its long-run average of 20. Equity vol pricing tranquility is one of the two conditions of a classic carry recompression setup.[2] · ICE BofA US High-Yield credit spreads remain historically tight and the HYG/LQD ratio sits near recent highs — meaning that the market is compensating investors very little for the volatility risk that a yen re-strengthening move has historically brought with it.[3] · This is precisely the setup the ATAC Credit Rotation ETF (Ticker: JOJO) was built to navigate — a bond ETF that rotates between high-yield credit and long-duration Treasuries based on a rules-based equity-defense signal, designed to move before the carry-trade unwind reprices credit rather than after.[4] · In my view the more honest read of this three-way configuration — yen at multi-decade weakness, equity vol at multi-month lows, credit complacent — is that the setup for a reverse-carry episode is in place. The catalyst is unknown. The setup is not. I’ve found that the moments in markets that most deserve attention are not the ones where every asset class is confirming the same story. They are the ones where the currency market, the equity vol market, and the credit market are pricing three different worlds. Right now, the yen is pricing extreme funding-currency weakness, equity vol is pricing tranquility, and credit is pricing perfection. In my experience, those three prices do not stay reconciled forever — and the historical resolution has usually been quick. That resolution risk is why the ATAC Credit Rotation ETF (JOJO) exists. THE MACRO BACKDROP: A CURRENCY AT MULTI-DECADE LOWS The most durable funding-currency story of the past several years — the persistent weakness of the Japanese yen against the US dollar — is now sitting at a fresh multi-year extreme. FXY closed at 56.95 on July 2, 2026 , just 55 cents above its 52-week low of 56.40, and at the very bottom end of its 52-week range of 56.40 to 63.26.[1] In dollar terms, the yen has depreciated to a level that has historically compressed the differential between Japanese and US funding costs to the point where the carry trade — borrow in yen, invest in higher-yielding assets abroad — has stopped being a curiosity and become a structural feature of global capital flows. Source: Invesco Currency Shares Japanese Yen Trust (FXY), Yahoo Finance daily closes July 2025 – July 2, 2026. The setup that has historically preceded sharp reversals in this trade is not currency weakness on its own — it is currency weakness paired with two other conditions: equity volatility sitting low enough that vol-scaled portfolios are running larger notional exposures than they otherwise would, and credit spreads tight enough that the risk of a rapid vol repricing is being under-compensated. Right now, both of those conditions are on the table. This is the three-way configuration — currency, vol, credit — that JOJO is designed to respect through a rules-based rotation between credit and duration. THE VOLATILITY SIDE: A FEAR GAUGE THAT HAS FULLY RESET The Cboe Volatility Index touched 22.22 on June 10, 2026 and has since collapsed to 16.15 on July 2 — a decline of roughly 27% and a level well below the long-run average of 20.[2] The equity vol surface has, by every conventional read, finished its post-June reset. A low VIX regime is not, in itself, a problem. The problem is that vol-scaled strategies — risk-parity, target-volatility, and increasingly a large share of systematic macro — mechanically scale up exposure when realized and implied vol both fall. That scaling is the mechanism by which carry trades quietly become larger, more crowded, and more sensitive to a shock that has not yet arrived. In August 2024, when the yen re-strengthened sharply and the carry trade unwound over a matter of days, the trigger was not a fundamental repricing of Japan’s interest rate outlook. The trigger was a small shift in policy expectations that ran into a positioning setup that had grown while the vol surface was calm. That episode is worth studying not because I think it will replay identically — it will not — but because the setup that preceded it is, in outline, the setup we are looking at now. Portfolios structurally committed to high-yield credit through that kind of episode paid a price. JOJO is built so that a rules-based investor does not have to. THE CREDIT SIDE: COMPLACENCY SITS NEAR RECENT HIGHS The third dimension of the reverse-carry setup is the credit market — specifically, how much compensation credit investors are demanding for the volatility risk that a currency-driven vol episode brings with it. The answer, right now, is very little. Source: iShares iBoxx $ High Yield (HYG) and Investment Grade (LQD) daily closes, April 1 – July 2, 2026. The ratio has drifted higher into July — a risk-on carry signature. The HYG/LQD ratio — the price of high-yield bonds relative to investment-grade — has drifted higher into July. That is the signature of a market in which the marginal buyer of credit is unwilling to pay a meaningful premium for the safer tier. Combined with the yen at multi-year lows and equity vol at multi-month lows, the message is that all three asset classes have decided the current regime is durable. Historically, that has been the moment where the setup is best. The three assets — currency, equity vol, credit — do not all price a benign regime for very long once one of them starts to move. The historical asymmetry has been that credit re-prices to vol faster than the reverse, and vol re-prices to currency dislocation faster than the reverse. In other words, the yen is the leading edge, credit is the trailing edge, and both are, right now, priced for continuity. THE SETUP CONFIGURATION The visual below is the setup — not a forecast, not a call, but a mapping of where the three assets sit today. Source: Cboe VIX and Invesco FXY daily closes, April 1 – July 2, 2026. The two-panel setup: equity vol collapsed to 16.15 and the yen at 56.95, just above its 52-week low. The catalyst for a reverse-carry episode is not something a portfolio manager can predict with confidence. What can be identified with confidence is whether the setup is in place — and by the two most reliable historical markers, it is. That is the question JOJO is designed to answer: not what triggers the unwind, but whether the equity-defense signal has begun to say hold the safer tier. WHAT THIS MEANS FOR A RULES-BASED CREDIT ROTATION APPROACH (JOJO) This is the kind of configuration that highlights why the ATAC Credit Rotation ETF (Ticker: JOJO) , which I brought to market and manage as portfolio manager, exists in the form it does. JOJO is a bond ETF that either holds high-yield credit exposure or long-duration Treasury exposure, based on the behavior of the Utilities sector relative to the broader S&P 500. The intuition is not complicated: when Utilities outperform the broader equity market, equity investors are quietly shifting toward defense — and historically, equity defense has led credit defense by enough time that a rules-based investor can act on the signal without trying to forecast the currency catalyst, the vol catalyst, or the credit trigger. The mechanics are not the pitch. The mechanics are that JOJO will hold credit when the equity-defense signal says hold credit, and will hold long-duration Treasuries when the signal says move. The fund is not designed to outsmart every short-term move in the yen, the VIX, or high-yield spreads. It is designed to not be structurally committed to credit risk through a regime change — specifically the kind of regime change that historically follows a three-way divergence between currency, vol, and credit. The 30-day SEC yield for JOJO is disclosed on the fund’s prospectus page at atacfunds.com/jojo, and I would encourage anyone considering the fund to review it there alongside the full statutory prospectus.[4] THE BOTTOM LINE Right now we have: — the Japanese yen ETF (FXY) at 56.95, just 55 cents above its 52-week low,[1] — the VIX collapsed to 16.15, a −27% round-trip from June 10,[2] — the HYG/LQD ratio at recent highs, signaling credit complacency,[3] and — an equity vol surface that has fully reset just as the currency and credit sides of the carry trade are pricing continuity. That combination does not guarantee a reverse-carry episode is imminent. But it does describe a setup where three of the most reliable historical markers of one are simultaneously in place. In my view, the more honest read of this configuration is not that the market has resolved the risk, but that the market has agreed to price it at zero — and pricing at zero is what precedes the historical re-pricings, not what follows them. JOJO is the vehicle I built to respect that asymmetry rather than argue with it. ENDNOTES [1] Invesco Currency Shares Japanese Yen Trust (FXY), Yahoo Finance daily closes, accessed July 5, 2026. [2] Cboe Global Markets. “VIX Index Historical Data.” Cboe Global Markets, Inc., 2026. Accessed 5 July 2026. [3] iShares iBoxx $ High Yield Corporate Bond ETF (HYG) and iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD), Yahoo Finance daily closes, accessed July 5, 2026. [4] ATAC Credit Rotation ETF (JOJO). Statutory Prospectus and 30-day SEC Yield Disclosure. Tidal Trust II, 2026. Accessed 5 July 2026. DISCLOSURES (JOJO) Junk debt, also known as high-yield bonds or speculative-grade debt, refers to fixed-income securities issued by companies or governments with lower credit ratings, offering higher interest rates to compensate investors for the elevated risk of default. The VIX index, often called the “fear gauge” of Wall Street, is a real-time market index that measures the market’s expectation of 30-day forward-looking volatility derived from S&P 500 index options prices, serving as a key barometer of investor sentiment and market risk. The ICE BofA BB US High Yield Index Option-Adjusted Spread measures the yield differential between BB-rated corporate bonds and a spot Treasury curve, quantifying the risk premium for below-investment-grade debt with a BB rating in the US market. As with all ETFs, Fund shares may be bought and sold in the secondary market at market prices. The market price normally should approximate the Fund’s net asset value per share (NAV), but the market price sometimes may be higher or lower than the NAV. The Fund is new with a limited operating history. There are a limited number of financial institutions authorized to buy and sell shares directly with the Fund, and there may be a limited number of other liquidity providers in the marketplace. There is no assurance that Fund shares will trade at any volume, or at all, on any stock exchange. Low trading activity may result in shares trading at a material discount to NAV. Because the Fund invests in Underlying ETFs an investor will indirectly bear the principal risks of the Underlying ETFs, including but not limited to, risks associated with investments in ETFs, equity securities, growth stocks, large and small capitalization companies, non-diversification, fixed income investments, derivatives and leverage. The prices of fixed income securities may be affected by changes in interest rates, the creditworthiness and financial strength of the issuer and other factors. An increase in prevailing interest rates typically causes the value of existing fixed income securities to fall and often has a greater impact on longer duration and/or higher quality fixed income securities. The Fund will bear its share of the fees and expenses of the underlying funds. Shareholders will pay higher expenses than would be the case if making direct investments in the underlying funds. Because the Fund expects to change its exposure as frequently as each week based on short-term price performance information, (i) the Fund’s exposure may be affected by significant market movements at or near the end of such short-term periods that are not predictive of such asset’s performance for subsequent periods and (ii) changes to the Fund’s exposure may lag a significant change in an asset’s direction (up or down) if such changes first take effect at or near a weekend. Such lags between an asset’s performance and changes to the Fund’s exposure may result in significant underperformance relative to the broader equity or fixed income market. Because the Adviser determines the exposure for the Fund based on the price movements of gold and lumber, the Fund is exposed to the risk that such assets or their relative price movements fail to accurately predict future performance. Past performance is no guarantee of future results. The Fund’s investment objectives, risks, charges, expenses and other information are described in the statutory or summary prospectus, which must be read and considered carefully before investing. You may download the statutory or summary prospectus or obtain a hard copy by calling 855-ATACFUND or visiting www.atacfunds.com. Please read the Prospectuses carefully before you invest. Investing involves risk including the possible loss of principal. JOJO is distributed by Foreside Fund Services, LLC. Learn more about $JOJO at https://atacfunds.com/jojo/ Lead-Lag Publishing, LLC is not an affiliate of Tidal/Toroso or ACA/Foreside.

View original →

Recent Thesis

Recent Calls

Covers

Top SP500 Analysts

Top SP500 Analysts

Michael A. Gayed

Recent Thesis

Recent Calls

Covers