Morning Note

Trading Observations

• PPI was also slightly lower with CPI, however yields grinding higher despite.  Suggest trade wars the sole focus at the moment

• US/Canada meeting today.  Trump threatens to put 200% tariff on French Champagne and other EU spirits. 

• On Mexico front border crossings down to almost 0 while Fentanyl seizures at lowest in 4 years https://tinyurl.com/226t43hh [tinyurl.com]

• Border progress may give Trump room to declare progress and ease tensions

• ADBE lower while AEO is the latest retailer to talk things down

• Levels the same: 5400 below vs. 5665, 5735, and 5850 above

• The VIX spot cash at 24 again, down 10% on day with VIX futures also down 6%, really the first signs of some true implied volatility contraction that may help fuel a rally into op-ex next week

• AAII Bears up to 59% while Bulls down to 19.1%, the lowest since July 2022 and 3rd week in a row under 20%

Futures

DOW -26

S&P -5

Nasdaq -44

Charts/Sentiment

Financials / Retail / Healthcare

DG – Up 6% - The entire street was bracing for impact in the Dollar Stores as the low-end consumer tapped out. Comparable sales of +1-2% is far from a disaster, so relief rally this morning.

AEO – Down 5% (was more) - Revenue down 5% y/y on negative sales growth isn’t going to get anywhere in this tape. 18% of their goods come from China and 20% from Vietnam.

STLA (Jeep Chrysler) – Down 3% on a debt offering.

CPAY, WEX – Baird positive on both names.

WFC, HLI upgraded, MC downgraded (to underperform) around the street. The MC cut is a harsh look at bad M&A markets for 2025, which fears are probably overblown.

SOFI - SoFi and Blue Owl Strike Deal for $5 Billion of Personal Loans

Technology

ADBE down despite mostly better-than-expected fQ1 results, reiterated FY25 guidance and new disclosures (including on AI which has been slow to ramp). STOCK lies below the 200 day moving average.. Below the 50 day.. and below the 10 day.. A very difficult set up to time for any turn. NEXT WEEK event might be their best effort (investor day 3/18)

INTC boosted by announcement it has appointed Lip-Bu Tan as its next CEO.

MSFT is raised to buy from neutral at D.A. Davidson, which says the software company has shifted to a “more rational” capex strategy. Its shares rise less than 1% in premarket trading

PLTR - Archer and Palantir will partner to develop AI powered software for critical aviation systems, including air traffic control, movement control and route planning.

PATH down big following its weaker fiscal Q4 ARR and FY26 ARR guidance, with the company flagging weakness in US federal amid recent disruptions.

SentinelOne (S) slumps 12% after the security software company gave a revenue forecast that disappointed.

Industrials 

Commercial Vehicles - Daimler Truck, Volvo, Traton, CMI, PCAR trading lower after US Government announces it is reevaluating the NOx rules for heavy duty trucks

Mercury Systems (MRCY) upgraded to buy from hold at Truist

Southern Copper (SCCO) upgraded to buy from neutral at UBS

Transports – Truist initiates coverage – ARCB Buy $93 PT, CHRW Buy $115 PT, FDX Buy $305 PT, ODFL Buy $220 PT, RXO Buy $24 PT, UPS Buy $140 PT, XPO Buy $130 PT, EXPD Hold $110 PT, GXO Hold $40 PT, JBHT Hold $165 PT, LSTR Hold $160 PT

Tesla is joining forces with Chinese tech giant Baidu to enhance its advanced driving systems in China, responding to criticism over recent software issues.

Latest Media

Our NYSE visit!!

Conversation w/ Kenny Polcari

Interesting Tweets

Disappointing rally attempt given how oversold we were, yday hit most oversold since Sept 2022

Seasonality now a tailwind

Dont have enough participation to suggest a meaningful bounce yet