PremiumThe S&P 500 gained +1% this week and finished almost flat for July (seemingly oblivious of the historic meltdown in momentum, where the massive Total Return Swap leverage used to amplify moves destroyed a popular hedge fund, an outcome we warned about more than a month ago) as investors have been battered as they navigate extreme volatility under the hood driven by concerns around the AI trade, technical factors, wars, a new Fed regime, capital market issuance, and Q2 earnings. Hyperscalers, Software, and AI-at-Risk were among the themes that outperformed, while IPPs, Memory, and Homebuilders were among the themes that underperformed.While the action below the seemingly smooth surface of the S&P was non-stop during July, the last week of the month was especially memorable: record momentum-factor vol, a hawkish hold from Warsh and the Fed, peak Q2 earnings week, and the largest three days of HF de-grossing in more than 3 years – all with the S&P finishing.... up 100bps on the week!