Morning Note

Trading Observations

• Waller. . pretty much said ”we should cut at the next meeting” 

• Favorable ruling for GOOGL helping AAPL, ZS higher on earnings lifting tech, will see if it can build

• Notable that SMH closed below 50-day (288.17) for first time since April, would like to see a reclaim

• Late rally got us back in 6400-6500 range

• JOLTS after the open

• Where we are historically https://tinyurl.com/256hc734 [tinyurl.com]

• If you're a goldbug, this is your moment (though DSI at 88 suggests a pause likely coming) https://tinyurl.com/mr25mawh [tinyurl.com]

• Jobs Friday, interesting anyway https://tinyurl.com/c94w53e9 [tinyurl.com]

• Everyone cautious for Sept (though it's really the last 2 weeks that are awful) https://tinyurl.com/4wmv8tdu [tinyurl.com]

• Smalls rallied, and some short covering, but hedgies still significantly short https://tinyurl.com/3ukzc89d [tinyurl.com]

Futures

DOW -108

S&P +20

Nasdaq +149

Charts/Sentiment

Financials / Consumer / Healthcare

CPB rise 1.7% after the food company’s 2Q adjusted EPS beat expectations, and sales were about in line.

KHC rise 0.6% in premarket trading as Morgan Stanley upgrades to equal-weight from underweight saying the stock’s valuation looks reasonable and the planned separation will limit downside.

M - shares jump 13% in premarket trading after the department store chain reported adjusted earnings per share for the second quarter that beat estimates, and boosted its forecast for the full year.

TRU rise 1.6% in premarket trading on Wednesday as Needham upgrades to buy from hold, saying the credit reporting agency is set to have a strong second half of 2025 and beyond.

WYNN - shares are up 1.1% in premarket trading, after Argus Research upgraded the hotels and casino company to buy from hold.

Technology

Citi Global TMT Conf: few key presentations Wednesday = ENTG, LRCX, INTU, EPAM, MRVL, VRNS, ROKU, WC, HPQ, BKNG, IFX, OKTA, AMD, STX, NOW, SBAC, NTAP, DDOG, CTSH, APH, ACVA, ON, SHOP, GLOB, COIN, CSCO, MB, XMTR, W

AAPL: +3.5% in sympathy with GOOGL decision; exclusivity language helping Apple - govt not saying they cant work together ... The fact Google won’t be barred from paying for search distribution is a huge relief for Apple, which takes in billions for making Google the default search engine on iOS devices

AAPL PX HIKES: expected to push through some modest iPhone price hikes next week when it launches new models (this could be achieved by eliminating SKUs and only offering phones with higher amounts of memory) (Mac Rumors)

APP: mgmt on the road this week (Jefferies, Citi, Scotia and others) ... Scotia had bullish takeaways post their mgmt meetings last wk

AeroVironment Inc (AVAV) – Baird 1Q26 Preview: We expect a modest EPS beat, as top-line growth is supported by Switchblade shipments and C-UAS product adoption, expect FMS awards given active pipeline

GOOGL: +6.5% breaking out; mother of all clearing events to fuel re-rating ... felt like favorable outcome was inevitable given recent turnover at DoJ (3 lawyers resigned in August in what could have been a career-defining case). (1)Google won’t have to divest Chrome; (2)will not be barred from paying for search distribution (Mehta says doing so would “pose a substantial risk of harm to OEMs, carriers, and browser developers” as all these parties would probably cont w/ Google as the default without receiving any compensation)

GOOGL vs META: Quick reminder of how hated / UW GOOGL has been over the past few years. Co has u/p META by 275% last three years; and over the past two yrs - sentiment has been quick to label it an AI winner or loser at any slight shift in narrative ... I/O in mid-May was definitely a game changer in terms of AI narrative = GOOGL ramping up AI monetization with immense scale and resources. Release of its Gemini 2.5 Pro model in March marked the start of a noticeable shift in how developers felt about its AI models .... Add recent GCP momentum, Waymo, YouTube

NVDA: up 0.7% in pre; trying to snap four-day losing streak (down ~6% over period)

TOST: -4% early alpha laggard .. assume negative 3P data call out there

ZS: +2.3% healthy beat; billings +32%; continues to maintain its leading share in the high-growth SASE market, while adoption of its new products including data security, which is exposed to the deployment of AI agents, continues to aid larger deal sizes .... Conservative guidance as Zscaler’s Zero Trust platform continues to take shape.

WDC +2.6% in premarket trading, after Morgan Stanley named the computer hardware and storage company its top pick, saying the shares “remain the most attractive short-and-longer-term investment opportunity in our Hardware coverage.”

Industrials 

Air Lease (AL) downgraded to hold from buy at Deutsche Bank; $65 PT

Allegion (ALLE) Raised to Strong Buy at CFRA; PT $207

AdvanSix (ASIX) initiated buy at Freedom Capital; $28 PT

Cummins (CMI) upgraded to buy from hold at Melius Research; $500 PT

5E Advanced Materials (FEAM) initiated buy at HC Wainwright; $7.50 PT

KB Home (KBH) initiated perform at Oppenheimer

REVG – Q3 Revs/EBITDA/EPS beats, FY metrics raised, stock trading up 7% to $56

Latest Media

$AFRM - From $50 to $160 to $9 to 78 (current)

Affirm’s (BNPL) business is working. (Is that really a good thing?)

We’re still out.