The Outsiders
morning musings 6.29.26- views from the island
“The best lack all conviction, while the worst are full of passionate intensity.”
— W.B. Yeats
Disillusionment with the status quo is everywhere. The systems aren't working for most people. Belief that they will change is waning.
The result is the advancement of alternative, extra-systemic solutions. The rapid rise to dominance of Trump is the prime example; he ran as an outsider. He still runs as one, despite his positions. The framing alone proved alluring enough.
Likewise, the popularity and electoral success of fringe candidates on both the left and right- MTG and the whole ‘America First’ cohort, Mamdani and the DSA/socialist candidates, Platner -are all reflections of this trend. Iran, the ultimate global outsider, is now being re-assimilated into the global order as a consequence of recent war (Will North Korea be next?).
There is an aspirational nature in play here, the sense that 'things can be better’ if we only break the mold and retool. The markets feel like a whiff of this has imbued the investment minds, as AI, hyperscalers, and ‘new paradigms’ are gaining both acolytes and investment dollars
TL;DR
The outsider trade is bigger than the tape. Russell 2000 is ahead of the SPX by ~14 points YTD, biggest gap since 2003. Every Mag 7 name is red on short-term measures. AI consensus longs are unwinding into quarter-end. Same pattern shows up everywhere else. Platner just won Maine 72-20 over the DSCC’s pick. Mamdani is running NYC. Iran is on day three of a fragile US ceasefire it never wanted in the first place.
Three different ideologies, three different gates, same anti-incumbent vector. The consensus longs — mega-cap tech, the dollar, the political duopoly, the post-1991 Middle East order — are all under siege at once. That isn’t coincidence. It is the shape of late-2026.
Whilst we’ve been busy watching the Iran ceasefire wobble and the AI trade fracture, a Marine-turned-oyster-farmer just buried the Maine Democratic establishment by 50 points. Same week, the Kospi opened down 3.4% and every Mag 7 name went red. Different gates, same noise outside.
Coincidence? I think not.
MY READ
The ‘outsider’ has become the dominant macro factor of this cycle and I don’t think enough people are connecting the dots. The market is rotating away from its most-owned names while voters are rotating away from their most-owned candidates. Russell 2000 +14ppts ahead of SPX in H1, biggest lead since 2003 (BBG). Every Mag 7 member red on short-term performance (BBG). Bitcoin ETFs bleeding $4.1B in June, worst month since launch (BBG).
Same week Graham Platner, who told the NYT that nothing he did in Iraq did anything for the people of Sullivan, Maine, smoked Janet Mills 72-20 in the Maine Senate primary. The DSCC was backing Mills until Mills quit. Mamdani won NYC promising free buses and frozen rents. Trump took the GOP in 2016 by running against the party that nominated him.
Three ideologies. One vector. Voters of both parties have decided the establishment is the trade to fade. The market is saying something similar.
WHAT MATTERS TODAY
Hormuz half-broken.
Tanker hit near the strait over the weekend, both sides stood down ahead of Tuesday’s Doha talks. NYK Line’s CEO: Hormuz traffic stays below 50% of prewar for months even if the deal holds (BBG). European gas storage at 48% vs a 63% seasonal norm.
Iran is publicly demanding sole control of the strait and rejecting the proposed Oman coastal lane. The ‘we won’ headline doesn’t match the plumbing. Iran is the geopolitical version of the same trade. Outside the order, refusing to come back in on the order’s terms.
Warsh era reset. PCE +4.1% YoY in May, hottest in three years. Kashkari pencilling in a 2026 hike. Williams calling 2% ‘imperative’. Goolsbee says inflation is ‘going the wrong way’ (BBG). The dot plot moved 9 of 18 into the hike camp. Futures price October. Wednesday’s Warsh speech at Sintra alongside Lagarde, Bailey and Macklem is the regime test. Anyone still holding duration on a September cut thesis is now offsides.
KOSPI as the leading indicator? Foreign investors dumped a record 7.7T won of Korean equities Monday. Samsung and SK Hynix opened down 6% each before staging a rescue with a combined $880B AI capex announcement (BBG). Two stocks are now 60% of the Kospi. If you want to know what crowded mega-cap concentration looks like at the index level, that’s the chart. Same playbook the US market is running with the Mag 7. Different country, same gate.
MOVERS THAT MATTER
CMCSA +25% pre-mkt. Tax-free spin of NBCUniversal and Sky into a separate public company. Cable establishment finally admitting it can’t carry the bundle forward. Charter +9.6% in sympathy. So what: re-rate of any cable name with a hidden content asset.
Mag 7 washed out, not yet bottomed. All seven red short-term (BBG). The ‘AI trade is intact’ chorus is coming from the same desks that were screaming concentration risk in April. Selectivity, not blanket beta. NVDA’s Indonesia Firmus deal (170,000 accelerators) and SK Hynix’s ~$29B US listing are the two reasons the structural bull case isn’t dead, just bruised (BBG).
IWM > QQQ. The trade the establishment can’t price. Russell-over-Nasdaq pair has worked the entire quarter. I am not convinced it’s done.
FLOWS AND POSITIONING
Hedge funds dumped global TMT last week at the fastest combined pace in a decade (GS PB). Equal-weight SPX beat cap-weight by the widest margin in six years. Semis shed ~$1.3T in market cap. The dollar is consolidating its post-Fed surge but JPM, MS and BNY are now targeting EUR/USD 1.10 over the next year (BBG). Shiller CAPE at 41.3 versus a long-term avg around 16 (Multpl).
Anyone telling you breadth is healthy is selling something.
Quarter-end is amplifying the move. Thin volumes, rebalancing flows, the Sintra Forum gauntlet Wednesday, eurozone flash CPI same day, US payrolls Thursday, US-Iran technical talks at some yet-unconfirmed point this week. Any clean view on the Fed path going into that has more conviction than the data warrants.
Look who’s at the gate. They don’t all want to tear it down. Some of them just want to build a better one. Either way, they don’t wait for an invitation.
Sentiment remains weak as core expenditures continue to rise as percentage of total spending .
Apparently the day session is the weakest!
Market is still pricing in robust forward US growth, leaving equities increasingly reliant on optimistic economic assumptions.
Behind the wall: the fiscal duration short via TBT. The AI broadening trade via SMH. The non-consensus dollar fade. The post-SVB regional breakout. The contrarian gold entry. Plus the four single-name bank expressions, with a market-neutral pair overlay. Stops named.”
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