Scouting the Tape - May 17, 2026

(Unique) macro idea generation and (insightful) market thoughts.

May 17, 2026

First off, a massive thank you to everyone who has contributed to this full on display of love and kindness. I am grateful for our community that is filled with such generous people who are front-footed in giving back and supporting others. You all donated and raised over $10,000 in less than a week for children and families going through some of the most difficult obstacles imaginable. Thank you very much.

Quinn Thompson@qthomp

Friends of @ForwardGuidance, we have a fun ask to make. We thought there'd be no better way to solve the debate of who gets the worst haircuts than to get buzz cuts for a good cause. We want to use our platform to raise money for children and families in need and and if we hit

1:46 PM · May 11, 2026 · 39.8K Views

6 Replies · 8 Reposts · 117 Likes

As for the markets, I have a lot of different thoughts this week so some will be quick hitter ideas more so than usual. Maybe over the coming weeks a few of them will really tug at my attention and I will go deeper. As a reader, I would suggest that is something to be on the look out for - when I write about sectors or trades consistently week over week, odds are my conviction and interest in them are growing.

S&P 500 Retail index is saying something much different than Nasdaq.

This chart is bat shit crazy to me and is the K-shaped economy in a nutshell.

When do SOFR futures become interesting?

The recent change in the Fed Funds rate market has been dramatic. We’ve been playing the rates market well this year having made money from both the long and short side.
Since early April we have been bearish on SOFR futures under the expectation that inflation was going to keep surprising to the upside. In late April we continued to expand on this idea, detailing the worsening inflation picture and the negative outlook for SOFR futures.
Here we are weeks later and you have almost 2 rate hikes priced into 2027 and I' find myself asking what is an attractive entry, if any, to get back into the trade from the long side. I’ve been focusing a lot on the June 2027 contract.
In that April 10th post I wrote “the optimal entries should come when equities are still trading well but inflation is surprising to the upside”. I think that could come over the coming 1-2 months. I think we still have a few more worsening inflation prints to get through but there will be a time to get long SOFR again as cheap insurance. I want to fade the rate hikes happening but do so from a great price.

Agricultural commodity futures are ripe for speculation.

I started writing about ags in a few March editions of Scouting the Tape. Initially laying out the high level trade and then simplifying it further. I believe this is an area to be seeking attractive risk/reward setups and trading around the complex.
One of the trades I am currently long are live cattle futures (LE). What if I told you that since the March 2020 COVID bottom, the asset has matched the S&P 500 return with a smaller max drawdown (-17%) and lower volatility. Suffice to say live cattle prices are in a secular bull market which is why you’re reading about the cost of beef hitting new highs every 3 months. I like the 5:1 risk/reward setup out of this head and shoulders on the daily chart. I’ve been long for a few weeks now so have a better entry than the current level but still really like it.
Live cattle are cows that have reached their finished weight (1,200-1,500 pounds) and are ready for slaughter. This is the primary point of price discovery for the beef industry, meatpackers and grocery chains, creating for a large and liquid market. There are also feeder cattle futures (GF) which constitute younger calves (700-900 pounds) that are sold to be fattened up for eventual slaughter. There is a concept that simplifies the supply chain known as “cost of gain” where essentially feeder cattle + corn + time = live cattle. The cattle crush spread is a profitability or margin calculation that = live cattle - (feeder cattle + corn).
From here you can understand that when the cost of corn and other agricultural commodities rise, it has a serious impact on the supply chain. It can cause the cost of feeder cattle to drop as they can only charge the market rate for the finished beef and thus their cost inputs must rebalance. Live cattle on the other hand are more resilient to broader ag inflation because their price includes all of the costs throughout the supply chain. I am drastically simplifying things here but maybe I will try to elaborate each week on a new aspect of the agricultural commodity complex as I assume most of my readers did not grow up in Wisconsin and have no familiarity with this stuff.

Capital vs. labor.

Shout out to Deer Point Macro for the updated capital vs. labor chart. I wrote about what I think is a bubble in corporate profits last week and used their chart to illustrate the divergence between the two camps of the economy.

Deer Point Macro@deerpointmacro

@qthomp Did have to update my chart, as the one I did here is the common way it’s calculated but it is a gross and not a net number so a lot of this is depreciation and reallocation of proprietors income to capital, nevertheless still not great.

12:42 PM · May 14, 2026 · 2.55K Views

1 Reply · 1 Repost · 8 Likes

Thank you all for reading and I hope everyone has a great week. On the next Forward Guidance episode I will have a shaved head courtesy of our wonderful fundraiser donors.