Morning Note

Trading Observations

• The lifting gets heavier now.  Economic numbers throwing up a caution flag.

• Breadth thrusts continue to fire   https://tinyurl.com/4tsr2kvn [tinyurl.com]

• And while great for 6-12 month outlooks, short-term overbought and rallied into resistance after six straight up days, so some wood to chop

• 5600 then 5750 resistance vs. 5490 first support

• PCE expected to cool, does that put more pressure on the Fed to cut or risk perception of being behind despite tariff rhetoric? https://tinyurl.com/mrx66kmu [tinyurl.com]

• Earnings at the forefront, SNAP +SMCI +FSLR + SBUX + BKNG being lower early

• V up small but saying consumer still strong https://tinyurl.com/mv26959t [tinyurl.com]

• META + MSFT will set the tone

• Despite the rally, II Bulls only rose slightly to 28% from 23.5%

• Cash has built https://tinyurl.com/h2z4pzcb [tinyurl.com]

Futures

DOW -352

S&P -80

Nasdaq -395

Charts/Sentiment

Financials / Retail / Healthcare

Visa – Down 1% - Quarter was solid. Cross border a little weak. Transactions +9% were a slight miss to expectations. The $30B buyback sounds large, but against a $700B EV its less than 2%.

Beta Financials down 2-4%. SOFI, HOOD, UPST, ETC.

SBUX – Price is getting juicy down here after another 10% down move on the quarter. Comps are roughly flat against a stock that’s been overpriced for years, so anyone who needs growth to own this thing has been exiting.

NCLH – First of the cruise lines to talk about a demand warning has it down 8% and the rest of the names down in sympathy.

VSCO – Downgraded to underweight at WFC. They also downgraded GAP.

VFC – Upgraded to equal-weight at Wells Fargo. They also upgraded LEVI to overweight.

WRBY – Upgraded at Citi on tariffs being “priced in”.

YUM – Down 2% - Taco Bell comps +11%, KFC +5%, unit count +3%. “Digital” is now 55% of revenue.

Technology

AAPL: #s Thur night / 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%

ABNB: #s Thur night / 8.1% implied move .. bogeys: Q1 nights 8.5% y/y vs St at 8.3% y/y; Q2 Nights Guide decel vs Q1

Autonomous Driving: Toyota/Waymo partnership headlines hit tpae around 7pm ET; outline strategic partnership

BKNG: -4% fairly solid quarter: RN +7% vs guide +5-7%, GBs +10% cc vs guide +9-11%. Q2 guide inline/a touch weaker: 4-6% RN growth (St +7%), 10-12% GBs incl ~4%pts points of FX tailwind (+6-8%cc vs St +7%cc) and EBITDA $2.15-2.20B (St $2.16B). CEO warned of uncertainty in the economy

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

ETSY: +7% sentiment cautious into print on lower consumer confidence / poor 3P data recently. Better than feard - sees take rate q/q; Q1 metrics ahead across the board. Margins better.

FRSH: +9% Beat and raise; 2025 OI guide updated to $139.5-147.5m (prev $131-139m) .. 3P data saw billings improve in March

LYFT: more activist noise - faces pressure from Engine Capital to explore options, including a sale of the company

MSFT CEO Satya Nadella on Tuesday said that as much as 30% of the company’s code is now written by artificial intelligence. – CNBC

NVDA bears focused on: (1)SMCI prelims/neg pre ugly; (2)HUAWEI begins providing its advanced AI chip cluster (aka CloudMatrix 384) to customers in China (Huawei says the cluster is more powerful than a cluster sold by Nvidia) (FT) ... #s not until May 28

QRVO: +9% strong EPS upside in FQ4 - beat driven by a combo of better sales ($870M vs. est $850M) and margins (240bp better), and the guide for FQ1 was healthy

SMCI: -15% UGLY negative pre ... now sees EPS of ~30c (est 53c) w/s ales of ~$4.55B (est $5.2B) as mgmt noting customer ramp push-outs to the JunQ which could be Tier2/Enterprise/GB200. GM down 220bps q/q to 9.6% (est 12%) ... Saying some customer platform decisions were delayed, shifting sales to Q4 => says new gen product designs are robust but this guide isn’t going to give anybody confidence on that.

SNAP: -15% no formal Q2 guide not great look - blaming macro + weighing on entire digital ad space ... co cutting 2025 opex guide by ~2%, hit 900m MAUs (target for 1B), guiding to Q2 DAUs +8m q/q, Q1 NA DAUs fell q/q which bears are pointing to as a negative datapoint given the Q1 TikTok shutdown ....

SNAP/Ad bankshots: PINS, RDDT, APP, META down 1% to 3%

STX: +7% solid beat; margins healthy / guide solid beat (demand continues to exceed supply, and higher output continues to be served by mix (higher-density drives) rather than capacity builds) ....

Industrials 

CAT – missed by 10c; revs missed by $380M. Order backlog increased $5B in Q1 vs 4Q

CECO Environmental (CECO) upgraded to buy at HC Wainwright

First Solar (FSLR) downgraded to perform from outperform at Oppenheimer and downgraded to underweight from sector weight at KeyBanc.  FSLR traded down 13%: First Solar cuts FY25 EPS view to $12.50-$17.50 from $17-$20

Ford Motor (F) upgraded to peer perform from underperform at Wolfe Research

GNRC – beat by 29c & sales also beat; widens FY sales forecast

PACCAR (PCAR) downgraded to neutral from overweight at JPMorgan

Sherwin-Williams (SHW) upgraded to overweight from equal weight at Wells Fargo Securities

Werner Enterprises (WERN) downgraded to underperform from in line at Evercore ISI

Volkswagen earnings plunge 40%

XPO Inc. (XPO) Q1 Adjusted EBITDA beats, stock ticking up 5% to $103 – reported Q1 of $1.95B in revenue, EBITDA of $278M and EPS of $0.73 ex-items, compared to cons of $1.98B/$271M/$0.66 – 2025 “planning assumptions” reiterated – likely see a nice relief rally in XPO after getting crushed post SAIA release

Zebra Technologies (ZBRA) upgraded to buy at Freedom Capital

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