The Edge

💬 Word on the Street

Rep. Gilbert Cisneros (D-CA) added a modest stake in Macy's Inc. (MHVIY) worth up to $15,000 while insiders at Diamondback Energy (FANG) collectively unloaded $341.6 million in what's shaping up to be a classic tale of two conviction levels. With smart money showing a net $633.6 million outflow today and the VIX cooling off by 4.4%, the divergence between what Washington is accumulating and what corporate executives are ditching tells an interesting story. Here's what smart money is doing today.

📚 Jargon Buster

Portfolio Margin

Fancy margin for grown-ups with options. Lets you lever way more… until everything correlates and you blow up spectacularly.

Market volatility presents a mixed picture this week, with equity fear gauges showing elevated concern while bond market stress remains subdued. The VIX declined 4.4% to 20.82, holding in elevated territory above the 20 level that typically signals heightened investor nervousness about stock market swings, while the MOVE index dropped more sharply by 15.7% to 11.77, indicating unusually calm conditions in Treasury markets. This divergence suggests equity investors are pricing in near-term uncertainty while bond traders appear relatively untroubled by rate volatility risks.

|| Market Sutra ||

"When the crowd becomes certain, the market becomes dangerous."

— Everyone believed rates would stay zero indefinitely—right before the 2022 rate shock.

Market participation shows a notable divergence between old economy and growth sectors, with Materials, Consumer Staples, and Energy demonstrating the strongest relative performance while Technology, Financials, and Communication sectors significantly lag. Breadth metrics reveal uneven participation across major indices, as the Nasdaq 100 shows considerably weaker internal strength at 50% compared to the transport-heavy IYT at 81%, suggesting a potential rotation away from mega-cap technology names. This performance pattern typically characterizes periods when investors favor defensive and commodity-linked exposures over growth and rate-sensitive areas of the market.

As of February 11, Fed net liquidity stood at $6.62 trillion, declining $16.5 billion week-over-week, which typically corresponds to tighter financial conditions as fewer dollars chase risk assets. The next H.4.1 report releases Thursday, February 19, providing updated figures on the Federal Reserve's balance sheet and liquidity measures that institutional traders monitor for shifts in market structure.

Markets are digesting another weak retail sales print from January that came in at -0.8% MoM, marking the second consecutive monthly decline and reinforcing concerns about consumer spending momentum heading into 2024, while the Economic Surprise Index slipped to +1.4 from +1.6 a week ago, showing data is barely tracking expectations. Today's retail sales report will be critical as traders assess whether consumers extended their pullback, with housing data also in focus as the NAHB index is expected to tick up modestly to 41.0 from 37.0—still deeply in contraction territory and sitting near levels last seen during the 2008-2009 financial crisis outside of the pandemic shock. Tomorrow's housing starts (estimated at 1.29M versus 1.366M prior) and FOMC minutes will command attention, particularly as the minutes could reveal Fed members' thinking on how persistent consumer weakness and a housing market that's been contracting for months factors into their rate path deliberations.

Institutional flows this week show a split decision on mega-cap technology, with 1,228 ETFs adding Tesla positions while 905 funds reduced Broadcom exposure, suggesting rotation within the semiconductor and EV spaces. Palantir attracted 890 new ETF positions as funds appeared to shift from established pharmaceutical plays like Eli Lilly (650 ETFs reducing) into AI-leveraged software infrastructure.

TSLA Tesla, Inc. ⭐

+ Buying Falling Stock 5D +1.5% 3M -3.1% 1Y +24.1%

1228 ETFs • 0 shares

AVGO Broadcom Inc. ⭐

+ Buying Falling Stock 5D -2.3% 3M -8.5% 1Y +38.0%

1051 ETFs • 0 shares

PLTR Palantir Technologies Inc. ⭐

+ Buying Falling Stock 5D -3.3% 3M -28.6% 1Y +11.9%

890 ETFs • 0 shares

AVGO Broadcom Inc. ⭐

- Selling Falling Stock 5D -2.3% 3M -8.5% 1Y +38.0%

905 ETFs • 0 shares

TSLA Tesla, Inc. ⭐

- Selling Falling Stock 5D +1.5% 3M -3.1% 1Y +24.1%

702 ETFs • 0 shares

LLY Eli Lilly and Company ⭐

- Selling Falling Stock 5D -1.6% 3M +2.3% 1Y +20.0%

650 ETFs • 0 shares

Rep. Gilbert Cisneros purchased positions in three international stocks—MHVIY, BABA, and AJINY—indicating activity in foreign equities. Meanwhile, Rep. John McGuire sold MSFT and Sen. John Boozman reduced holdings in IVW and FISV, representing divestment from large-cap technology and financial services positions.

MHVIY MHVIY ⭐ CONGRESS

▲ + Buying Rising Stock

Rep. Gilbert Cisneros (Gilbert Cisneros) • $1,001 - $15,000

BABA Alibaba Group Holding Limited ⭐ CONGRESS

+ Buying Falling Stock 5D -4.2% 3M -1.4% 1Y +33.8%

Rep. Gilbert Cisneros (Gilbert Cisneros) • $1,001 - $15,000

AJINY Ajinomoto Co., Inc. ⭐ CONGRESS

▲ + Buying Rising Stock 5D +9.1% 3M +17.3% 1Y +47.5%

Rep. Gilbert Cisneros (Gilbert Cisneros) • $1,001 - $15,000

MSFT Microsoft Corporation ⭐ CONGRESS

- Selling Falling Stock 5D +0.0% 3M -21.3% 1Y -1.2%

Rep. John McGuire (John McGuire) • $1,001 - $15,000

IVW iShares S&P 500 Growth ETF ⭐ CONGRESS

- Selling Falling Stock 5D -1.8% 3M -3.6% 1Y +13.8%

Sen. John Boozman (John Boozman) • $1,001 - $15,000

FISV Fiserv, Inc. ⭐ CONGRESS

- Selling Falling Stock 5D -1.1% 3M -7.8% 1Y -73.9%

Sen. John Boozman (John Boozman) • $1,001 - $15,000

Insider activity showed balanced signals this week with notable clustering at Lamb Weston (LW) where 26 insiders received awards, RTX with 18 insider purchases, and Eli Lilly (LLY) recording 14 insider transactions. On the distribution side, concentrated selling occurred at Diamondback Energy (FANG) with 5 insiders offloading $341.6M, while MPWR saw the largest insider cluster with 26 participants selling $248.9M and Wynn Resorts (WYNN) recorded 15 insiders selling $249.8M in stock.

LW Lamb Weston Holdings, Inc. ⭐ INSIDER

▲ + Buying Rising Stock 5D -0.6% 3M -14.8% 1Y -10.1%

26 insiders • $224.2M

RTX RTX Corporation ⭐ INSIDER

▲ + Buying Rising Stock 5D +0.7% 3M +13.0% 1Y +60.7%

18 insiders • $110.3M

LLY Eli Lilly and Company ⭐ INSIDER

+ Buying Falling Stock 5D -1.6% 3M +2.3% 1Y +20.0%

14 insiders • $101.7M

FANG Diamondback Energy, Inc. ⭐ INSIDER

▲ - Selling Rising Stock 5D +1.3% 3M +16.5% 1Y +11.9%

5 insiders • $341.6M

WYNN Wynn Resorts, Limited ⭐ INSIDER

- Selling Falling Stock 5D -3.9% 3M -9.1% 1Y +46.1%

15 insiders • $249.8M

MPWR Monolithic Power Systems, Inc. ⭐ INSIDER

▲ - Selling Rising Stock 5D -4.7% 3M +22.2% 1Y +68.6%

26 insiders • $248.9M

Today's earnings slate includes 328 companies, with RIO.BA and 5101.T showing recent accumulation patterns from institutional investors ahead of their reports. Tomorrow's calendar expands to 495 companies reporting results. On the distribution side, TXAR.BA and MCOR.JK have seen institutional selling pressure leading into their earnings announcements.