Morning Note

Trading Observations

• Constructive day for the bulls, down 2% in an overbought market and still rallied to close higher

• MSFT + META validating data center spend and ramping cap-ex to refute the slowdown narrative

• Data center spend in particular continuing unabated, would that be the case if recession on the horizon?  

• Remain very overbought so a pullback wouldn't shock

• Oil continues to breakdown, jobless claims were not great

• 5600 resistance tested on the open, 5740 above vs. 5500 first support

• Notable, despite the 3 week rally, AAII Bulls DROP to 20.9%, the lowest since Sept 2022 and below the 28% bulls on Apr 9th low https://tinyurl.com/bdemdcy3 [tinyurl.com]

• With 10 week bear avg at record highs https://tinyurl.com/muwnwu4n [tinyurl.com]

   

Futures

DOW +209

S&P +56

Nasdaq +305

Charts/Sentiment

Financials / Retail / Healthcare

JPM on Banks – KRX Bank Index is up 8% vs 2% SPY despite fundamentals only being ok. Likely a non-tariff play by the stock market.

KSS – Currently halted. CEO to be terminated for cause. Short stint. They also announced preliminary comp sales down 4% vs down 6% street. Someone please take this thing private.

HOOD - +5% - Some is earnings, some is “risk on”. Tax was part of the beat, but trends all look solid.

FNMA – Loan delinquencies said to be the worst since either Covid or the GFC. The stock and the market do not care.

SHAK - +7% Took up high end of guidance very slightly.

MCD – Down 2% - I blame the overpriced P/E multiple of being a Dow stock.

OWL – Down 4% - Slight miss on what is a Private Equity/Credit player that had been a hot pick. Taking people’s money has been good, making them money with their investments, not as good.

W – up 7% - Wayfair up on a relief rally as numbers look good and all the tariff sellers scatter.

KKR – Flat. They raised another $31B in the quarter (astonishing).

CWH – Camping World was down 14%, now today up 6% on an upgrade at JPM as April sales have been fine, but management doesn’t know what to guide.

WH – Wyndham Hotels FY guidance reduced by 300 bps.

ABNB: #s tonight / 8.1% implied move .. bogeys: Q1 nights 8.5% y/y vs St at 8.3% y/y; Q2 Nights Guide decel vs Q1 ... crowdeds short on margin pressure / macro risk

Crypto: Morgan Stanley plans to add crypto trading to its E*Trade platform sometime next year (Bberg)

Technology

AAPL: #s tonight / 4.2% implied move ... positioning 4 out of 10 .. bogeys: Q2 revs $95-96B vs St at $94B; Q3 revs inline; Q3 GM 45.5% vs St at 46.7%

AAPL ruling: -1.1% a federal judge ruled that Apple violated a court order requiring it to open up the App Store to outside payment options and must stop charging commissions on purchases outside its software marketplace; the judge referred the case to federal prosecutors to investigate whether Apple committed criminal contempt of court for flouting her 2021 ruling.

AI Hard Catalyst Path: May 6-8: NOW: ServiceNow Knowledge in Vegas ..... May 19-22 Microsoft Build; Dell Technologies World 2025 .... May 20-23: Computex Taiwan 2025 .... June 2-4: Snowflake Summit 2025 in SF .... June 9-10: Databricks Data + AI Summit in SF .... June 10 Marvell Investor Day ... October 2025: Oracle CloudWordl; Dreamforce in SF

AMZN: #s tonight / 5.9% implied move .... Positioning 7+ out of 10 ... bogeys: Q1 AWS: 17% vs street at 17.2%; Q1 EBIT: $18B vs street at $17.5B vs guide $14–18B; Q2 Rev guide: $162B at high end vs street at $161.6B; Q2 EBIT: $17.5–18B vs street at $17.7B CY25 AWS Capex: $85B

• AMZN: said it will invest >$4B to expand its rural delivery network, with a focus on small towns across the US as the firm looks to bring products faster to more customers

ANSS: -3% as Q1 misses; lackluster guide

CART: #s Thur evening; bogeys have seen: Q1 GTV growth & EBITDA above the top end of guide (10%+ and $230m+ resp); Q2 guide for GTV growth +8-9% high-end, and EBITDA ~$235m high-end .. sentiment / positioning feels more mixed having been HF long 2H'24. Bears expecting EBITDA downgrades from customer trade downs, CPG advertising pressure and higher S&M costs due to greater competitive pressure

EBAY: Q1 slightly ahead of the guide, and Q2 outlook ahead on rev. Q1 GMV +2% FXN vs guide +0-1%cc, revenue $2.6b vs guide $2.52-2.56b, EPS $1.38 vs guide $1.32-1.36. Buyback $625m vs Q4 $900m.

GOOGL: CEO warns that any effort to break the company up would severely hamper its ability to compete and innovate (NYT)

• GOOGL/AI: hopeful its Gemini AI models are added alongside OpenAI as an option for Apple Intelligence users (Bloomberg)

KLAC: beat + raise; $5B buyback. "Though global trade dynamics are driving uncertainty across the global economy, to date, we have received no indications of demand changes from our customers for calendar year 2025"

META: +6% surprised not higher / ppl picking at few things .... Better Q1/Q2 revs. Lowers opex to $113-$118B from $114-$119B. Raises Capex to $64B to $72B from $60-$65B (didn’t hear many expect this raise) ... Users across the various apps exceeded the consensus at +6% to 3.43B (for Daily Active People, or DAP). Buyback ~$13.4bn in qtr (vs $0 last qtr); Headcount 76,834 up ~2.8k q/q vs 74,067 last qtr)

• META CAPEX HIKE: not expectd .... “reflects additional data center investments to support our artificial intelligence efforts as well as an increase in the expected cost of infrastructure hardware “

• META / AMMO FOR THE BULLS: "Cathie Wood's Ark Offloads Meta Platforms"

MSFT: +9% impressive upside on every single metric, espc the critical Azure business. Amy Hood sounded great on call .... Azure +35% ccy vs street/bogeys at 31%. Much better Revs - biggest Rev beat in 6 quarters. Oper margins 200bps while. Biggest beats came from Intelligent Cloud (revenue +22% FXN to $26.8B vs. the Street $26B) and PCs (revenue +7% FXN to $13.4B vs. the Street $12.66B) while Productivity & Business Processes was just a bit ahead

NOW: upgraded at Truist - believes Co will continue to consolidate the enterprise IT stack, leveraging AI and macro uncertainty to strengthen its relative positioning versus other vendors; a "rare compounder"

NVDA: $115 big level where failed back on 4/9; impressive reversal to close flat; shrs under pressure early (desk saw flurry HF supply) - fueled by Huawei FT article, SMCI miss, AI diffusion rules overhang, Seaport sell initation

• NVDA: Jensen says all American companies will need 'AI factories,' WSJ says

QCOM: -6% Licensing revs poor + lingering uncertainty on future AAPL rev ... Better Q1/Q2 revs vs. street but light vs bogeys. Guides QCT revenue $8.7B to $9.3B (est $8.98B); QTL rev $1.15B to $1.35B (est $1.3B)

Industrials 

Boeing (BA) - Ryanair to seek alternative supplier if Trump tariffs materially affect price of Boeing planes it has ordered - Reuters

Caterpillar (CAT) upgraded to outperform from perform at Oppenheimer and to Neutral at Baird

Cintas (CTAS) downgraded to sell at Redburn Atlantic

Meritage Homes (MTH) removed from Goldman’s US Conviction List – Director’s Cut

Saia Inc (SAIA) downgraded to hold from buy at Deutsche Bank

Silgan (SLGN) upgraded to overweight at JP Morgan

Taylor Morrison Home (TMHC) discloses accelerated share repurchase agreement with Mizuho Securities

Tesla (TSLA) denies it is searching for new CEO - Earlier today, there was a media report erroneously claiming that the Tesla board had contacted recruitment firms to initiate a CEO search at the company

United Parcel Service (UPS) downgraded to hold from buy at HSBC

Latest Media

Wall Street's Top Indicators Are Sending Mixed Signals.

Recession or Resilience?