The US-Iran ceasefire’s fighting for its life.

“After reading that piece of garbage they sent us — I didn’t even finish reading it,” Donald Trump said Monday, reiterating his disgust for Tehran’s counterproposal to end the war.

“I would say the ceasefire is on massive life support,” he went on, during ad hoc remarks to reporters in the Oval Office. “Where the doctor walks in and says, ‘Sir, your loved one has approximately a 1% chance of living.'”

That’s a pretty grim assessment, but equities were unbothered into the US afternoon, when the S&P was on track for yet another fresh all-time high. If the gains held, it’d be the sixth record in eight sessions.

As melt-ups go, this one ranks right up there in my book, not necessarily on any quantifiable measure of exceptionality, but just in the sense that it feels singularly inexorable.

That impression — of a melt-up that’s uniquely unyielding — is a function of the contrast between near daily record highs and an absurdly foreboding geopolitical backdrop, as discussed in the latest Weekly.

On Monday, Nomura’s Charlie McElligott walked through both the macro and micro fundamentals behind the surge, before reiterating just how acute the situation was for market participants caught flat-footed by the rebound off the late-March lows.

The figure on the left, below, shows you the extent to which earnings growth in Q1 was the best since the halcyon, go-go days in 2021, when corporates were lapping easy YoY comps and consumers were flush with “stimmy.” (As a quick reminder: About 9ppt of that ~25ppt growth is attributable to write-ups on Amazon and Alphabet’s Anthropic stakes.)

The Bloomie screengrab on the right shows you the inflection in US economic surprise indices. (The top pane is the overall surprise index. The bottom pane is the labor component gauge.)

The fundamentals are “positive,” Charlie said. The US economy appears to be reaccelerating, earnings growth’s robust and, as discussed here on too many occasions to count over the last week or so, revisions (and revisions breadth) are overtly bullish.

On the flows front, the figure below gives you a sense of how nearly everyone’s been forced to chase upside.

“Hedge fund de-grossing into the post-Iran rVol shock meant low net leverage and low systematic exposure,” McElligott wrote.

When you throw in mutual funds’ inability to own enough tech and their de facto underweights in more or less everything that’s working, including oil & gas, you’re left with a market that was wildly under-positioned and desperate the catch up.

That catch up attempt’s evidenced in an eye-watering collapse in relative demand for downside protection on big-tech (left-hand chart, below) versus lots of interest in right-tail optionality (right-hand chart).

You’d need the longer-term series to make any definitive pronouncements on this, but that collapse in QQQ skew looks like it might rank pretty high on a list of fastest “flatteners,” if rates/bonds junkies will pardon my hijacking their lingo.

A corollary of the panicked bid for OTM calls, evidenced by the 100%ile call skew illustrated on the right (above), is an epic “SUVU” regime in tech.

The figures below show you the extent to which that part of this story gets crazier (for lack of a better word) by the session.

Realized vol on Nasdaq “up” days is now 10x that on down days.

Meanwhile, “the Boomer demographic continues to pump money into ‘income-at-all-cost’ options premium products,” Charlie went on. The lion’s share of that (ballooning) AUM is in products that sell covered calls. The melt-up’s forcing them to cover, thereby feeding not just the rally, but their own underperformance.

The cherry on the proverbial sundae: Leveraged ETFs which, on Nomura’s reckoning, have bought $115 billion on the rebalance over the last month, with more than 80% of those flows going to tech, semis and AI-adjacent equities.