Trading Observations

• 3Q GDP was up 3.1% Q/Q vs est of 2.8%.  Not helping yields.

• Powell took a hawkish tone yesterday after 25 bps cut, market not doesn’t expect a cut until JUNE!

• 10yr becoming a problem above 4.5% if continues could really spook the market

• MU down as consumer segment was weak (PC)

• 6010 support got cracked yesterday.

• Very Bearish if we open higher and can’t hold the rally.

Upgrades – SQ, BFH, CCCC, CADE, DTM, FTNT, GGG, HXL, HPE, LPLA, MNKD, NEW, OKTA, PNFP, RTX, S, SWK, SYF, TPR, TGNA, ZM, AFRM

Downgrades – ALXO, BRLT, AI, CABA, EWCZ, GD, HEI, MU, GLUE, PTVE, VVX, VRDN, WDC

Futures

DOW +349

S&P +48

Nasdaq +150

10-Year Yield - Houston we have a problem

Oil

BITCOIN

Consumer/Financial Healthcare

Bloomberg calling banks “possibly oversold” afte a rough day Wednesday on higher rates.

LEN – Homebuilder down 8% on Q1 guidance short of expectations. Rates are killing these guys.

AFRM – Upgraded to buy at Barclays.

LPLA – Upgraded to buy at TD.

LW – They make French Fries, and are down 18% on a poor outlook. Ozempic for the win.

SQ – Upgraded at Opco on 2025 growth outlook.

ACN – Up 5% on solid results and guidance up 1%. Bookings slowed and employee count outgrew that number if you are looking for a negative.

TPH- Tripointe Homes announced a $250M buyback vs $3.7B EV, a 6.7% buyback yield.

Hyatt signs long-term licensing agreement with The Venetian Resort Las Vegas.

Dealmakers expect Trump 2.0 will result in mega-deal rebound – FT

Barclays is set to increase bonuses by 5-10% for trading and 10-20% in capital markets

Technology

Megacaps: TSLA+2.7%, NVDA+2%, META+1.3%, AMZN/GOOGL/MSFT +0.8%, AAPL -10bps

Semis: SOX unch since March

AAPL headlines: (1)is in talks w/Tencent and ByteDance to integrate their AI models into iPhones sold in the Chinese market (Reuters) ... (2)Apple close to seeing Indonesia’s ban on iPhone 16 sales lifted (Bloomberg) ... (3)Co gives up on an iPhone subscription service (whereby users would pay a fee and receive the latest iPhone each year) (Bloomberg)

ACN: headline revs beat. Guiding 2Q and FY ahead of street. 1Q new bookings of $18.7bn of which $1.2bn were "helping clients realize value with gen-AI"

AMZN: will see workers walk off the job at multiple distribution centers Thurs morning (although the total number of employees in question is tiny compared to the company’s total workforce)

MU: -14% setup into print was v TRICKY given violent squeeze post AVGO T+1 reaction (US/Asian HFs hated it but were no doubt fearful of getting doors blown off on Dec 19) .... shrs hit on brutal guide (Q2 revs $7.9B; ~$1B below); margins terrible. Mgmt blaming consumer weakness

PC chain/Micron (note both DELL/HPQ talked down PC): Micron PC outlook is tempered – “The PC refresh cycle is unfolding more gradually, and we expect PC unit volume growth to be flattish in calendar 2024, slightly below prior expectations”

PLTR: Palantir extends Army Vantage deal with $618.9 Million contract

Industrials 

Canadian National Railway (CNI) upgraded to outperform from in line at Evercore ISI

General Dynamics (GD) downgraded to sector perform from outperform at RBC

Graco (GGG) upgraded to outperform from neutral at BNP Paribas Exane

Hexcel (HXL) upgraded to outperform from sector perform at RBC

Lennox International (LII) to replace CTLT in S&P 500 following CTLT acquisition today; BILL to replace LII in the S&P MidCap 400

Pactiv Evergreen (PTVE) downgraded to sector perform from outperform at RBC

RTX Corp. (RTX) upgraded to outperform from sector perform at RBC

Sonoco Products (SON) announces ~$1.8B sale of Thermoformed and Flexible Packaging business to TOPPAN Holdings

Stanley Black & Decker (SWK) upgraded to outperform from neutral at Mizuho Securities USA

Tri Pointe Homes (TPH) announces $250M stock repurchase program

LUV – the FAA said it has completed a safety review of Southwest opened in Jul following a series of incidents – Reuters

Nippon Steel falling short in its lobbying efforts to prevent rejection of US Steel takeover – Reuters