Morning Note

Trading Observations

• Goldman Sachs most shorted stocks vs largest hedge fund long index was down a whopping 5% yesterday in a roughly flat tape. Retail traders are back crushing hedge fund traders with their larger wallet share of the US stock trading world.

• MEME Frenzy contd: GPRO+40%, Krispy Kreme+15%. Tech Px action: YTD Losers outperformed winners by 350bps Tues = massive spread but for perspective the winners vs. losers spread is close to +100% this year.

• Japanese auto stocks exploded higher as investors expressed relief about the trade deal: Mazda Motor +17%, Subaru +16%, Toyota +14%, Honda +11%, etc. HSTECH +2.5%

• 6225 support vs. 6305 resistance

• Certainly could see (due) a pullback, but none of them ended with strong reversals nor tip new bear trends https://tinyurl.com/34tapftn [tinyurl.com]

Futures

DOW +245

S&P +23

Nasdaq +12

Charts/Sentiment

Financials / Consumer / Healthcare

Goldman Sachs most shorted stocks vs largest hedge fund long index was down a whopping 5% yesterday in a roughly flat tape. Retail traders are back crushing hedge fund traders with their larger wallet share of the US stock trading world.

FI – Fiserv Down 15% on bad merchant growth, lowered FY25 organic growth and a deal to buy part of TD bank’s Payment Group. They are returning capital to shareholders as hard as they can at 130% of FCF, and the 15x P/E is attractive, but the market hates negatively inflecting growth.

MARA – Bitcoin name down 5% on a $850MM stock offering.

RKT – Up 5% as call buying has been active as it enters the meme stock parade.

DNUT – Krispy Kreme has entered the meme stock chat, up 34% this morning.

COF – Up 3% as its lawsuit with Trump has been stalled for now.

HLT – Down 2% on a solid quarter, but small net income guidance cut.

Technology

Semis/Analog: TXN -10% smoked on light guide (+4% at mid vs buyside closer to 7-8%); ppl expected much cleaner print/guide given higher exposure to Industrial. Auto recovery cont to bounce along the bottom. Ests to dampen given elevated 2H optimism .... Bankshots: ON-7%, MCHP-6.5%, NXPI-4.6%, STM-4.3%, IFX-2%

AAPL / Talent Bleed: a profile article in The Information discusses how Apple is struggling to attract and retain top-level AI talent (The Information)

AI POWER UP | GEV +4% to sell 29 gas turbines to Crusoe for AI datacenters

DELL: put its COO in charge of the PC business following a multi-quarter slump in unit sales (Bloomberg)

MEME Frenzy contd: what a time to be alive - GPRO+50%, Krispy Kreme+25% ... follows OPEN/KSS nonsense from prior sessions

NTDOY/Nintendo: active name on desk last few weeks .... shrs +70bps overnight; laggard within group + versus Nikkei surging 3.5% post trade deal (industrials/autos/cyclicals rallied hard as moves within tech more muted given some of the red flags have seen)

NOKIA: -7% cut ystrdy during US session citing impact from FX and tariffs; consensus Ebit expected to drop by at least 11%

RBLX: -1.5% RayJ downgrade pretty flimsy ... cites higher bar into print post massive run fueled by narrative shift ... shrs hit ystrdy as High Beta 12M winners got

Software/AI: SAP -3% a decent inline print with CCB +28% vs street at 27.5% maybe a bit light of heightened expects given stock at highs ..... PEGA -7% as total ACV ccy growth below whispers (bulls closer to 15%)

TEL: +3.3% on light vol post better Q/guide - "The Industrial segment's results were led by the delivery of high-speed connectivity solutions into AI applications, and strong growth in our energy business." ... conf call 830am ET

UBISOFT: +4.5% upbeat Q2 guide offsets Q1 miss. Net bookings view supported by continued strength of Rainbow Six Siege X and additional partnerships; hopes monetization performance should improve

xAI: is burning through cash aggressively given extremely elevated costs and minimal revenue and Musk is pulling all the financial levers at his disposal to raise more money for the business as he tries to keep up with deep-pocketed rivals like Microsoft, Amazon, Meta, and Google (WSJ)

U - falls 3.5% after BTIG gives the application software company a rare sell rating, downgrading from neutral following a strong run for the shares

Industrials 

GEV: Q2 EPS $1.86 vs cons $1.51 on better revenue $9.11bn vs cons $8.81bn. Adj EBITDA came in better $770mn vs cons $721.2mn. For FY, guided revenue towards higher end of prior guide $36-$37bn and cons $37.03bn. Guided EBITDA margin to 8-9% vs. Prior guidance of HSD and raised FCF guidance to $3-$3.5bn vs prior guidance of $2-$2.5bn and cons $2.5bn

ENPH shares fall 5% after the solar equipment company forecast revenue for the third quarter that missed the average analyst estimate. It also sees the US residential market shrinking 20% next year as tax credits for homeowners end under President Donald Trump’s sweeping economic legislation.

Alamo Group (ALG) downgraded to neutral from buy at DA Davidson; $225 PT

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

Fluence Energy (FLNC) downgraded to neutral from buy at Seaport Research Partners

June US Architecture Billings Index (ABI) falls to 46.8 from 47.2 in May – New Projects Inquiries Index 53.6 vs. month-ago 51.4 - "Business conditions were soft nationwide in June, with a slight billing increase in the South for the first time since October. Other regions saw declining billings, though at a slower pace.”

Freeport-McMoRan (FCX) downgraded to hold from buy at HSBC

Hub Group (HUBG) upgraded to buy from hold at Deutsche Bank; $41 PT

Lockheed Martin (LMT) downgraded to hold from buy at Truist; $440 PT

PACCAR (PCAR) upgraded to neutral from sell at UBS

Pentair (PNR) downgraded to hold from buy at TD Cowen; $110 PT

Taylor Morrison Home (TMHC) upgraded to buy at Seaport Research

Toll Brothers (TOL) upgraded to buy at Seaport Research

Latest Media

$GEV is up +200% over the past year.

Valuation & more have us on the sidelines for now.