iiinova — where your digital self keeps evolving

Mill Street Research @millstreetresearch.com · 6h

Micron reported strong earnings after the close, beating consensus estimates, not a big initial reaction so far. Expectations have been extremely high for chip/memory stocks, so beating the official consensus is not always enough to produce a big reaction for a stock up 273% this year.

010

Mill Street Research @millstreetresearch.com · 6h

Stocks weakened into the close after headlines indicating concerns about Google's latest AI model, pushing the stock lower. Also, Trump said Jay Powell should be forced to resign from the Fed board, something about the Fed building renovations.

140

Mill Street Research @millstreetresearch.com · 11h

Oil up today, so bond yields up, macro data not having much impact on the longer end. S&P 500 seemingly ignoring yields at the moment, but again thanks to Tech and Energy, while most of the rest of the market is flat to down. Apple, NVIDIA, Microsoft, Alphabet, and Amazon holding things up.

030

Mill Street Research @millstreetresearch.com · 13h

If you think, as the market seems to, that fed funds will be around 4.75% next year, then a 10-year of 5.25% is not that high. So unless consumer spending or labor market weaken substantially, hard to see a reason to buy bonds. And that would likely require the stock market to go down materially.

031

Mill Street Research @millstreetresearch.com · 13h

Some yield curve steepening today as the 10-year yield is now back to unchanged, no benefit from the economic data, while the 2-year yield is down 3bps. Long end sees solid spending and Fed getting behind the curve after Williams said yesterday he sees only 1 more hike this year.

150

Mill Street Research @millstreetresearch.com · 13h

Spending is outpacing income growth due to a mix of borrowing and spending capital gains. Stocks are the most volatile component of household assets (vs fixed income and real estate) and have had the biggest gains, so the stock market is now a bigger influence on consumer spending than in the past.

030

Mill Street Research @millstreetresearch.com · 13h

The saving rate is still quite low relative to the (revised) history: the current 4.1% is well below the 6.7% average since 2010. 5-7% was the general range since 2010 excluding COVID-related shocks and tax changes (2012). Saving rate got even lower in 2005-07, in the 2-3% range.

130

Mill Street Research @millstreetresearch.com · 13h

Looks like some fairly large revisions to the income and spending data, producing substantial changes to the personal saving rate data. The saving rate was 3.0% for July before today's revisions, now shows as 4.6%, a big swing. Same going back, e.g. Dec. 2025 was 3.6%, now 5.0%.

130

Mill Street Research @millstreetresearch.com · 13h

Third estimate of Q2 GDP was revised higher from 1.5% to 2.2%, with consumption revised up and inflation revised down. Bond yields mildly lower, mostly on the short end as October rate hike odds are reduced. Not a huge response. Stocks get a boost while waiting for Micron (MU) earnings report.

030

Mill Street Research @millstreetresearch.com · 13h

Economic data out this morning looks good overall, though sustainability of consumer spending remains a concern. Core PCE inflation better than expected at 0.2%, brings Y/Y to 3.0%, and prior data revised lower. Aug. spending +0.9% while income +0.2%. Spending +6.1% Y/Y vs 4.3% Y/Y income growth

150

Mill Street Research @millstreetresearch.com · 29/09/2026

High federal deficits in the US look likely to continue for a while, but extremely low household saving rates are the biggest potential risk factor -- a reversion to longer-term norms would reduce corporate profit growth meaningfully.

040

Mill Street Research @millstreetresearch.com · 29/09/2026

Federal deficits and household behavior (dis-saving) are key drivers of aggregate profits, and both have strongly supported profits in recent years. China is a counter-example: conditions that might seem strongly supportive of profits are in fact creating some of the weakest profit trends globally.

130

Mill Street Research @millstreetresearch.com · 29/09/2026

Some drivers of profits may be intuitive but some may not: for instance, at a macro level, corporate capex (investment) is not in fact the key driver of aggregate profits right now, but is a key factor in which sectors of the economy are benefiting (e.g. Tech vs everything else).

130

Mill Street Research @millstreetresearch.com · 29/09/2026

It discusses the macro drivers of corporate profits through the lens of the Kalecki-Levy profit equation, an accounting identity that describes the components of corporate profits for the whole economy, i.e., Investment + Dividends - Household saving - Government saving - Rest-of-world saving

130

Mill Street Research @millstreetresearch.com · 29/09/2026

New blog post: In this post, I share a Special Report that Mill Street clients received last week, which may be of broader interest: What are the drivers of the extraordinary surge in corporate profits, who benefits most and least, and what might change? www.millstreetresearch.com/special-repo...

millstreetresearch.com

Special Report: Corporate Profits as a Deficit - The Kalecki-Levy Corporate Profit Equation - Mill Street Research

In this post, I share a Special Report that Mill Street clients received last week, and which may be of broader interest. This is one of our occasional topical reports that we publish in addition to o...

142

Mill Street Research @millstreetresearch.com · 29/09/2026

Headlines coming through about 30-year yields hitting highest since 2002, now at 5.6%. But that's not unusual based on current fed funds (3.75-4.0%) and the market's view of a peak around 4.8% next year. Since 2002, the 30yr has averaged ~1.9% above fed funds, though with wide variation.

082

Mill Street Research @millstreetresearch.com · 29/09/2026

Checking on corporate borrowing costs, long-term Baa-rated corporate bonds now yield 6.75% according to Bloomberg's index. That's up 80bps just since June 29 and close to the peak of 6.93% in October 2023. Core PCE inflation ~3.3% (next update tomorrow) means real borrowing rate is ~3.5%.

040

Mill Street Research @millstreetresearch.com · 29/09/2026

Bonds still acting poorly even as oil prices have declined today. 10-year yield sitting near recent highs at 5.25%, 2-year at 4.94%, pricing in 2-3 more rate hikes. Stocks not doing much to start off the day, Semis up but broader indices flat.

060

Mill Street Research @millstreetresearch.com · 28/09/2026

Real bear market action in long bonds lately. TLT down -10.5% since the end of June, and in a downtrend since (at least) the peak at 92 in October 2025 (now 78.40). High deficits, high AI issuance, Fed behind on inflation, economy fine, stocks attracting all the money = no reason to buy bonds.

040

Mill Street Research @millstreetresearch.com · 28/09/2026

Bond yields rising further, now touching 5.26% on the 10-year as oil bounces back up. Stocks under somewhat more pressure as a result. S&P 500 -0.9%, Russell 2000 -1.0%, NASDAQ-100 -1.4%.

140

Mill Street Research @millstreetresearch.com · 28/09/2026

Stocks down fairly broadly today, giving back most of Friday's gains. Declines in Microsoft and Meta, plus software overall, are outweighing the gain in NVIDIA. Small-caps lagging. Oil is up but off its highs, while bond yields are holding at cycle highs, 10-year yield at 5.21%, 2-year at 4.90%.

060

Mill Street Research @millstreetresearch.com · 28/09/2026

Can see the divergence very clearly when looking at margins: operating cash flow (OCF) margin is historically high, but free cash flow (FCF) margin is not. Mid-caps look different: OCF margins have risen but are not at all-time highs (and structurally lower), and same for FCF margins.

030

Mill Street Research @millstreetresearch.com · 28/09/2026

The ongoing capex surge in the S&P 500 (mostly Tech) continues to produce a big gap between projected (next-12-month, NTM) operating cash flow and free cash flow. So valuations are somewhat expensive vs history but not bad using operating cash flow, but still very expensive using free cash flow.

140

Mill Street Research @millstreetresearch.com · 25/09/2026

Nominal yields have been rising, but mostly due to higher real growth than higher inflation expectations. Which seems odd given the inflation pressures and fuel prices, but is consistent with economic data coming in above expectations almost everywhere except China (Citi Surprise indices).

030

Mill Street Research @millstreetresearch.com · 25/09/2026

Interesting to see US TIPS yields nearing 3% (based on the ICE US TIPS index) while inflation expectations are hovering near 2.5% for the CPI for the next 1-2 years. The trend is global too, as inflation-linked bond yields in Europe (while lower) have also risen to 15-year highs lately.

150

Mill Street Research @millstreetresearch.com · 25/09/2026

Quiet day in markets overall so far. Bonds, oil, and stocks all not much changed -- stocks opened higher but have come back to roughly unchanged. Microsoft the biggest support for the S&P 500, Meta the biggest drag. 10-year Treasury yield rising a bit, holding near its latest highs at 5.21%.

040

Mill Street Research @millstreetresearch.com · 25/09/2026

The Michigan sentiment data remains very strange, and still mostly useless for market forecasting purposes. It continues to diverge wildly from aggregate economic data, making it a socio-political measure rather than a direct measure of economic activity or likely policy action.

070

Mill Street Research @millstreetresearch.com · 24/09/2026

Ha ha, just kidding, now US and Iran are "exploring a phased deal" to reopen the Strait according to "sources". Oil prices going back down again. Still sounds like Lucy and the football, using vague headlines to try to keep the markets calm. www.reuters.com/world/asia-p...

reuters.com

Insight: US and Iran discuss phased deal to reopen Hormuz and end US blockade, sources say

US and Iranian negotiators in New York are exploring a phased path out of war that would involve Tehran reopening the Strait of Hormuz and Washington lifting its economic blockade of Iran, sources clo...

140

Mill Street Research @millstreetresearch.com · 24/09/2026

Many people are saying . . . Market odds holding at 66% chance of a hike in October, and if not then definitely in December. Roughly 50/50 still we get 2 more hikes this year.

071

Mill Street Research @millstreetresearch.com · 24/09/2026

Oil rising further just now, latest headline seems to be this on Bloomberg: YEMEN'S HOUTHIS CLAIM ATTACKS ON SAUDI ARABIA'S JAZAN Evidently Jazan is a big alternate port on the Red Sea.

160

Mill Street Research @millstreetresearch.com · 24/09/2026

Of course, the average outstanding rate for all mortgages remains much lower, though rising slowly because turnover in mortgages has been low and getting even lower based on the MBA Mortgage Activity index. Still a key reason non-AI fixed investment remains weak.

040

Mill Street Research @millstreetresearch.com · 24/09/2026

In "yikes" news for those trying to get a mortgage for a home, the 30-year mortgage rate has now risen 125 bps from Feb. 27th to Sept. 23rd. The rate is now the highest since May 2024 at 7.39%, based on the ICE index capturing a balance-weighted average of 30-year mortgage loan lock rates.

160

Mill Street Research @millstreetresearch.com · 24/09/2026

Stock futures trading down this morning after yesterday's decline. Higher bond yields and oil were the problem yesterday, while today it looks like news from Oracle is hurting it as well as data center-related stocks www.bloomberg.com/news/article...

bloomberg.com

Oracle Cites ‘Force Majeure’ to Shield Itself on Controversial Data Center

Oracle Corp. is moving to shield itself from racking up expenses on a massive data center being built in New Mexico, adding a fresh wrinkle to a project beset by opposition and regulatory setbacks.

060

Mill Street Research @millstreetresearch.com · 23/09/2026

Some useful data analysis by @mtkonczal.bsky.social about whether shutting down immigration has helped native-born US workers at all. TL;DR is a very clear "No", with a much appreciated assist from #1 Jonathan Frakes newsletter.mikekonczal.com/p/can-we-fin...

newsletter.mikekonczal.com

Can We Find Literally Any Sign Deportations Are Helping Native-Born Workers?

Shoot the moon! Ten hypotheses, ten charts, and no payoff for native-born workers.

0154

Mill Street Research @millstreetresearch.com · 23/09/2026

These are some big yield moves in Treasuries today, +14-16bps across the curve. Means the long-bond ETF, TLT, is down -1.5%, a new low. That's a 2.4 SD move. Odds of an October rate hike now 73%, and about even odds we get 2 rate hikes by year-end. Stocks under pressure but not drastically.

080

Mill Street Research @millstreetresearch.com · 23/09/2026

Fed officials talking more about rate hikes, and inflation not behaving . . . 2-year Treasury yield up 11bps today at 4.86%, another new high since mid-2024. The post-COVID peak 2yr yield was 5.22% in October 2023.

050

Mill Street Research @millstreetresearch.com · 23/09/2026

This continues to be a key factor in why consumer spending keeps growing faster than wage income, i.e., official saving rate declining. Stock market gains (and real estate to a lesser extent) are funding spending now more than in the past. The economy depends on the stock market more than before.

040

Mill Street Research @millstreetresearch.com · 23/09/2026

So far the Fed has been willing to shift toward tightening, but no signs that they will be aggressive with it: another 50-75bps in the next 6-9 months is not aggressive tightening with 6%+ nominal GDP growth and 3-4% inflation. So far no signs of money really coming out of stocks.

060

Mill Street Research @millstreetresearch.com · 23/09/2026

All this continues to force the question of: is AI-driven strength enough to counter higher yields? Tech investment has been offsetting weakness in non-Tech fixed investment for some time, while households reducing saving and big fiscal deficits are the key macro factors supporting spending.

140

Mill Street Research @millstreetresearch.com · 23/09/2026

Strong PMI readings from S&P today are pushing bond yields back up, with the 10-year touching a new high of 5.03%. This is weighing on stock prices this morning, following the big gains Monday and mixed day yesterday. Oil is also coming off its recent lows as well.

160

Mill Street Research @millstreetresearch.com · 22/09/2026

Our own empirical work backs up both the fact that analyst coverage and usefulness beyond FY2 estimates drops off, and that *relative* revisions to EPS estimates are (still) useful for helping forecast future (1-6 month) *relative* (not absolute) returns (along with price and valuation inputs).

030

Mill Street Research @millstreetresearch.com · 22/09/2026

Interesting post from @duncanlamont2.bsky.social, and highlights why Mill Street's MAER stock selection model only uses analyst estimate data for FY1 and FY2 (nothing beyond that). We also only use the changes (revisions) to estimates rather than the (positively skewed) growth forecasts themselves.

160

Mill Street Research @millstreetresearch.com · 21/09/2026

Per Bloomberg, UK Maritime Trade Operations said 32 ships/day have crossed the Strait with US assistance from Sept. 17-19, but presumably many do not have transponders on and thus not counted as they would usually be. Uncertainty remains high, but markets seem willing to take an optimistic view.

030

Mill Street Research @millstreetresearch.com · 21/09/2026

Oil and related prices are falling on news that shipments through the Strait of Hormuz have increased, according to Admiral Brad Cooper of US Central Command. Notably, this has not really shown up in the Bloomberg data on ships crossing the Strait, still averaging just 6/day over the last month.

130

Mill Street Research @millstreetresearch.com · 21/09/2026

Plunging oil price and renewed interest in Tech/AI stocks is pushing the S&P 500 up 1.5% today, led by NASDAQ-100 gain of 2.6% and Semiconductor Index gain of 3.8% so far. Russell 2000 and equal-weighted S&P 500 (RSP) are lagging with ~0.5% gains.

230

Mill Street Research @millstreetresearch.com · 21/09/2026

The Semiconductor Index (SOX) had fallen about 24% from the June 22 peak to Sep. 14. Since then it has rallied back 10%, moving back above the 50-day average. The narrower, Tech/AI leadership is back while the broader market has been lagging. This is true even today when oil+rates are lower.

050

Mill Street Research @millstreetresearch.com · 21/09/2026

Stocks trading higher today, with large-caps again leading vs small-caps. Mostly Big Tech driving the indices, led by META and AMD. Oil is down despite ongoing problems in Ukraine and Middle East, so that is helping moderate bond yields, while the VIX is back below 15.

070

Mill Street Research @millstreetresearch.com · 18/09/2026

Looks like a late rally in Tech may have been set off by headlines that Anthropic sees $100B in annualized revenue this year, and is planning to go ahead with its IPO. Will be interesting to see how OpenAI responds, and what the market's more considered response is on Monday.

040

Mill Street Research @millstreetresearch.com · 18/09/2026

Yep, RSP approaching the 5% correction level since the Aug. 14th peak. 10yr yield up about 35bps since then. We're back to narrow, Tech-driven market again, since non-AI companies have to care about rates.

010

Mill Street Research @millstreetresearch.com · 18/09/2026

Which market segments care about rates/oil is more stark some days than others. Semis ignoring the 10yr back at 5%, up 1.2% Russell 2000 down -0.7% after lagging yesterday. R2K has lagged S&P 500 by 4.5% in the last month, and is down -7% from its August peak.

140