Morning Note

Trading Observations

• Knee jerk reacting to NFPs is higher rates, higher equities, as in inflation and growth look intact. The two-month revision was negative 95k jobs, but the headline beat by 13k, so net-net lower growth run rate, but its still growth.

  • Bloomberg says we get two cuts this year, one in September, one in December. We doubt we get much rate relief until PCE has a 1% handle and tariffs are in a better place.

  • Pre-market looks “risk on” to me. AVGO recovering. Homebuilders and REITs will do the worst, banks and technology the best on the higher rate move.

  • Momentum still feels like higher for now. Headlines can break down some gains, but it feels like retail remains ready with an unrelenting bid.

  • Market does not seem scared of politics when the outcome looks to be another $2T in deficit spend. Therefore, the bond market has to break to scare spending lower.

Futures

DOW +238

S&P +38

Nasdaq +165

Charts/Sentiment

Financials / Consumer / Healthcare

LULU – Down 18% on earnings. The stock had a good run into earnings and held a small premium to the S&P valuation, then dropped a negative 1% domestic comp. P/E about 17x here seems fair. Feels like buyers should help it a bit, but no reason to be largely bullish.

RJF – Reiterated Buy at GS post Investor Day. They see an 8% revenue CAGR to 2030.

UBS – Said to need another $26B to fill their capital hole. Print it.

HOOD – Up another 2% on potential S&P 500 inclusion.

Technology

AVGO – Down 2% - The run into the quarter was majestic, the quarter was in-line, which has created some slight overbought pressure. That said there’s nothing wrong here to upset the “AI trade applecart”. The stock is just more expensive than NVDA despite a lower growth rate.

CRCL – Up another 16% this morning to $96. Priced at $31 a few days ago. Stablecoins, which is a step in the process towards using crypto as a currency. Good luck US Dollar.

CSCO – Reiterated overweight at JPM.

TSLA – Up 3% on bounce back post Musk/Trump spat.

RKLB – Up 6% on “Musk burnt the SpaceX bridge”.

If the other 90% don’t just start saying yes to this survey soon you can eat my lunch.

Source GS

Industrials 

AVAV – PT up to $210 at Baird given Blue-Halo merger closure and a strong desire to “drone up” around the world.

DE – Upgraded to buy at Melius.

MTZ – Upgraded to buy at GS. They also downgraded MYRG to neutral.

MOS – Down 5% on Phosphate sales volume cut.

Latest Media

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