Morning Note

Trading Observations

• Solid first day with a full audience... 3/1 advance/decline, Dow at a new all time high, Broker-Dealer index at a record high (tends to lead) hopefully sets us up for more upside

• ADP tomorrow, Jobs Friday

• In semis, first raise of 2026 as MCHP pre-released positively

• 6920 first resistance vs. 6810 support (50-day)

• Overall, S&P margins continue to expand https://tinyurl.com/3hrcm8sd [tinyurl.com]

• A different cut at P/E ratio https://tinyurl.com/2xk24bs9 [tinyurl.com]

• While we are more cautious on banks (valuations), hard to be too negative on market with XLF reaching a new all-time high and BAC trying to break out of a 20 YEAR base (report next week) https://tinyurl.com/mjencf9t [tinyurl.com]

• Bitcoin on the verge of reasserting https://tinyurl.com/369vzc4x [tinyurl.com]

• Rally not just confined to US, rest of world breaking out to 6 month relative highs https://tinyurl.com/d2f4xyue [tinyurl.com]

• Software seems to be an area of growing concern, and semis have clearly retaken the baton https://tinyurl.com/53askm9s [tinyurl.com]

Futures

DOW -46

S&P -2

Nasdaq +28

Charts/Sentiment

Financials / Consumer / Healthcare

SOFI – Completed another $1B+ capital raise last night.

JPM on Banks – Expecting solid results from Trust Banks, thinks large cap stocks could be chippy in earnings if outlooks are only moderate against the 2x P/TBV for money center banks against a long-term average of 1.3x.

Baird on Banks – Cautious on valuations. Points out BAC trying to break out of a 20-year base finally. Downgrading WFC and KEY to underperform as they think expectations and valuation are both too high.

GS on Regional Banks – Upgrades BFH to neutral, and downgrades FCNCA noting regionals underperformed. Valuation a lot better than large cap peers at in-line with historical averages. Top picks CFG, HBAN, TFC, KEY, RF and ZION.

GS on Consumer Finance stocks – Stocks outperformed last year nicely, but valuation isn’t as attractive. Top picks in cards are COF and ALLY.

FISV, FIS – Baird calls one vs. the other a toss up into 2026 guides, and likes FISV longer-term.

DHI – Downgraded to equal-weight at WFC.

ALMS – Today’s drug winner +143% on Psoriasis trials meeting all endpoints.

UA – Up 4% on activist disclosing a 22% stake.

SHAK – Upgraded at DB.

EAT – Upgraded at UBS.

LLY, NVO - Eli Lilly cuts Mounjaro price in China, heightening competition with Novo Nordisk and locals – Bloomey

Technology

AAPL: Goldman commentary - Apple App Store spending down slightly in December - grew roughly 6% y/y in December 2025, decelerating from November as weakness in Games and Entertainment and softer trends in China and Japan offset stable U.S. growth

AMD: +0.7% announced MI440X, for use in smaller corporate data centers. Su said the rate and pace of AI innovation has been incredible

ANALOG/AUTO SEMIS: MCHP +5% 2nd positive pre within a month .... IFX+4%, STM+3%, ON+2.5%, NXPI+3% aftr hrs, TXN +1%, etc

APP: named top idea at Benchmark

CAT: CEO keynote tmrw @ CES .... AI related equip orders were +225% y/y in 2025

CRWV extends its cloud platform w NVDIA Rubin Platform

MCHP: +5% 2nd preannouncement in month (at UBS in early Dec) .... Now says revenue will come in at $1.185B vs. the Street $1.139B). “We continue to experience a fairly broad-based recovery in most of our end markets driven by progress we have made in inventory correction in distribution as well as direct customers, and with new customer designs turning to production. Our bookings activity was very strong in the December quarter despite a holiday filled quarter. Our March quarter starting backlog started out much better than that for the December quarter”

MEMORY: SNDK+4%, MU+2% ..... Asia: PHISON/NANYA both limit UP / +10%; Hynix+2.4%, Kioxia+2.2%, Samsung-1.8%

NVDA: said it is seeing strong demand for the H200 chip from China .... first to release an open reasoning VLA model designed to tackle long-tail autonomous driving challenges; NVIDIA Alpamayo family also includes simulation tools and datasets for AV development

OKTA: +1% announces $1B share repurchase program

IMSR – up 20% Executes DOE agreement for Project TETRA under advanced reactor pilot program

PLTR: Truist bullish init / PT $223 - "holds a unique market position and is ideally positioned for increased AI adoption by both govts and enterprises. Expects Palantir to maintain a strong margin profile while continuing to benefit from AI tailwinds on its top line"

SHOP: downgraded @ Wolfe - citing four reasons: (1)elevated expectations that leave modest room for upside; (2)what it sees as modest upside to margins; (3)Agentic Commerce promise that it says seems priced in; (4)and a valuation that "looks full" after a re-rating over the last two years

SMCI: Supermicro expands manufacturing, liquid-cooling capacity for Nvidia Vera Rubin AI platforms (DigiTimes)

ZETA +10% (up 9% during regular hrs) - OpenAI models will support athena's next phase of development .... shorted + under owned

TSMC: +2.1% overnight .. printing fresh highs = Top Pick: agnostic to who wins AI arms race / #1 preference as all roads lead to Taiwan (TPUs, GPUs, ASICs) -> no meaningful challenger in sight, TSMC is the de facto producer of XPUs, and hence one of the primary beneficiaries of AI growth .... BULLS’ conviction in the AI megatrend is strengthening. AI demand is stronger than we thought three months ago

TSMC build: reportedly set to build 12 Arizona fabs as Japan, Germany expansions stall (DigiTimes)

Industrials 

Industrials Air Lease (AL) downgraded to equal weight from overweight at Barclays; $65 PT

AptarGroup (ATR) downgraded to equal weight from overweight at Wells Fargo; $133 PT

Ball Corp (BALL) Raised to Buy at Citi; PT $67Ball Corp (BALL) upgraded to overweight from underweight at Wells Fargo; $60 PT

D.R. Horton (DHI) downgraded to equal weight from overweight at Wells Fargo Securities; $155 PT

Greif (GEF) downgraded to equal weight from overweight at Wells Fargo; $72 PT

Graphic Packaging (GPK) downgraded to underweight from equal weight at Wells Fargo; $12 PT

HASI and RUN announce new $500M joint venture for distributed power development.

Landstar System (LSTR) upgraded to overweight from equal weight; $170 PT

Mobileye Global (MBLY) upgraded to neutral from underweight at JPMorgan; $13 PT

O-I Glass (OI) upgraded to overweight from equal weight at Wells Fargo; $18 PT

Packaging Corporation of America (PKG) upgraded to overweight from equal weight at Wells Fargo; $233 PT

Parker-Hannifin (PH) initiated overweight at JPMorgan; $1,050 PT

Saia Inc (SAIA) upgraded to overweight from equal-weight at Stephens

Trex (TREX) Raised to Buy at UBS; PT $52

Werner Enterprises (WERN) Raised to Equal-Weight at Wells Fargo; PT $34

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