Morning Note

Calendar

This Week – Retail earnings and a host of Fed speakers abound. The earnings feel like the bigger deal unless someone sends a message June cuts aren’t coming.

Wednesday – 2 Fed Speakers, LOW, TGT, TJX earnings (mixed)

Thursday – Initial Jobless Claims, WSM, ROST, ADSK, WDAY, DECK earrings.

Friday – 3 Fed Speakers (plus Powell Sunday)

Trading Observations

• Encouraging to see stabilization, but little incremental

• While bonds displaced things, a good take https://tinyurl.com/3r2y2245 [tinyurl.com] 

• House reconciliation passes https://tinyurl.com/2hzd663w [tinyurl.com]

• Pullback not surprising, but yield worry and 88% down volume day concerning... Avoided the 90% red flag for now

• Don't want to see another >80% down volume day

• We did break a steep trendline https://tinyurl.com/4ej6ztsw [tinyurl.com]

• Still short-term overbought

• Sliced through 5900, but remain constructive if we hold 5750 vs. 5900 first resistance with 6000 bigger hurdle

• AAII Bulls show a pulse https://tinyurl.com/7wpbzyku [tinyurl.com]  

• Will small caps ever catch a bid? https://tinyurl.com/msc4z87m [tinyurl.com]

Futures

DOW -81

S&P +1

Nasdaq +51

Charts/Sentiment

Financials / Consumer / Healthcare

FNMA – Fannie Mae up 40% and FRCC up 58% as Trump has floated a public offering. Anyone who was around for 2008 is rolling their eyes at this.

Bitcoin related all strong, up 3-5% this morning.

HIMS – Down 8% after Cigna says they will cap weight loss spend at $200 per month for patients.

BJ – Up 2% on a very boring and solid quarter.

NKE +2% on news they will sell through AMZN channel again, which is the first time since 2019.

WMT trimming 1500 workers (they employ 2.1MM).

AAP – Up 33% - 10MM shares short screaming as the world bet China tariffs would kill them and they held FY guidance.

URBN – Up 19% - Also high short interest here at 9MM shares against a solid report.

WSM – Down 5% as people pull back from overpriced sheets and pots.

HUM, UNH – Lower on plans for the US to expand its audit process. These are the new villains of our healthcare spending.

AAP – soars after better-than-feared Q1 report, strong profit guidance +19%. The auto retailer reaffirmed FY25 guidance for revenue of $8.4 billion to $8.6 billion (midpoint $8.5 billion) vs. $8.47 consensus and EPS of $1.50 to $2.50 (midpoint $2.00) vs. $1.42…

LVMH has apparently been sending out “cautious signals” to analysts about Q2 business trends as consumer confidence, especially in China, stays soft – Bloomey

HIMS - slump as much as 11% in premarket trading after Cigna said its drug benefit unit will cap out-of-pocket costs for weight-loss drugs at $200 a month for patients — posing a cheaper cash-pay alternative to the telehealth’s offerings.

Technology

SEMIS/SMH: SMH -90bps in pre; SOX quietly down four in a row (granted only -142bps over that span and follows 44% surge off lows). SOX hard fail at 5,000; has contd to make lower highs on major rallies since peaking in July 2024 ....

AAPL vs Ive/Altman: OpenAI aims to ship 100M AI “companions” as part of its acquisition of Jony Ive’s io Products (starting in late 2026), although the devices would complement PCs/smartphones rather than replace them (OpenAI’s Altman says the io Products deal could add $1B in value to OpenAI)

ADI: +3.5% solid top / bottom line beat; Auto came in well ahead of expects. Well liked name but positioning was fairly light given most semi dollars found way back into AI proxies. Conf call at 10am ET .... watch IFX/STM in Europe; MCHP, TXN, ON in US

CRWV: monster move >$100 level ... is as simple as view that AI / capex spend going higher and they will cont to benefit ... Bulls cont to emphasize that with hyperscale cloud providers currently charging 5-6x higher prices for AI-as-a-Service compared to neoclouds, CoreWeave has a strategic window to build brand recognition and capture market share before NVIDIA's expanding software ecosystem potentially threatens infrastructure software profits

NVDA Bogeys: remain topical with print week out ... hearing Q2: $43B revs (sellside $43.2B); Q3 Guide: $45B (sellside $46.6B)

NVDA: the White House said it would retain strict controls on the ability of American firms to sell advanced AI chips into China (Bloomberg)

NVTS: +173% on 22m shrs .... anncd Nvidia collaboration

SNOW +10%: Beat this Q & guiding next Q above. Also raised FY26 Prod Rev Growth guide to 25% from 24%. Very solid print in our view, relative to both expectations, and angst about software broadly. 26% product growth this qtr vs bogey we heard was ~24% (guide was 21-22%) & guiding to 25% growth next qtr (we heard 23-24% buyside). Raising FY product rev growth to 25% from 24% & leaving FY26 margin guides unchanged.

WDAY #s / 7% implied move ... #s hit 4:01pm w/ guide in PR; conf call at 430pm ET ... Sentiment is relatively sanguine on the story (lot more caution 3 mos ago). Few checks highlighted that FY26 outlooks appear maintained at this point, with partners continuing to hire for their WDAY practices; contacts acknowledge potential lag impact to business tied to macro / DOGE, not seen impact pipe conversion / growth yet

ZM: +1.4% Q1 EPS beat, better sales with Enterprise above plan while Online was inline. Margins above by 150bps + buyback pace accelerated. churn rate is indicating improved customer retention despite competitive pressures. FY rev guidance is increased, FCF reit

Industrials 

Dana (DAN) Raised to Outperform at RBC; PT $20

Honeywell (HON) to acquire Johnson Matthey's Catalyst Technologies business segment for £1.8B cash.

SOLAR: Entire sector trading much lower after an amendment to the house bill last night that tightened up the investment tax credits timeline - basically solar, wind, geothermal have to be in construction within 60 days to receive the credits. Residential solar getting hit the hardest (ENPH, RUN & SEDG). Also, ARRY, FSLR, NXT & SHLS.

Sunrun (RUN) Cut to Underperform at BMO; PT $4 Cut to Neutral at BNPP Exane; PT $10

United Rentals (URI) upgraded to overweight from sector weight at KeyBanc

XPeng (XPEV) Raised to Outperform at Macquarie; PT $24

Latest Media

Wall Street's Top Indicators Are Sending Mixed Signals.

Recession or Resilience?