Morning Note

Trading Observations

• News quiet over the weekend,  Earnings take center stage

• Macro employment front and center with JOLTS Tues, ADP Wed, and Jobs Fri

• The battle of 5500 at the fore and won't be easy, if we push thru 5750 significant

• China quietly reduced tariffs on a number of fronts

• A pullback this week would not be unusual given the move https://tinyurl.com/2h2vc8zc [tinyurl.com]

• Short-term overbought, but sentiment https://tinyurl.com/5fwkwzna [tinyurl.com]

• VIX reversal notable https://tinyurl.com/3wk2bp9f [tinyurl.com] 

• Decent chart deck on tariff effect https://tinyurl.com/wsn8w7e9 [tinyurl.com]

• Will small caps ever catch a bid? https://tinyurl.com/2vvd7xh5 [tinyurl.com]

• US equities are lagging the rest of the world by the widest margin since 1993 so far this year – FT

• US negotiations w/Japan may not be moving along as rapidly as some recent media reporting would suggest – FT

Futures

DOW +103

S&P +10

Nasdaq +25

Charts/Sentiment

Financials / Retail / Healthcare

ONON – +3% - Upgraded to buy at Citi on resilient sales.

PTON – +6% - Upgraded at Truist on “growth inflection”.

DC Real Estate – CoStar and GS saying early signs of rent deceleration is clearly happening. UDR and CPT have exposure.

BKU – Softer NII and investors will watch MII outlook to not continue that slowness. Net charge offs a bit worse too, different than peers.

MCD – Baird earnings preview expects comps below consensus. Stock also carries a valuation premium to historical.

SOFI – Up 2% - Motley Fool saying “this one was a no-brainier” at the bottom.

Technology

"Huawei Technologies is preparing to test its newest and most powerful AI processor, which the company hopes could replace higher-end products of Nvidia. The development is still at an early age and a series of tests on its performance will be needed" .. Pre mkt movers (as of 635am ET): SMH dn 0.3%, SMCI dn 0.7%, MU dn 0.8%, MRVL dn 0.9%, AMD dn 1%, NVDA/AVGO dn 1.1%

AI Chip wars: Huawei ready to test new AI chip to take business from Nvidia (Reuters)

CRWD - unveiled Charlotte AI Agentic Response and Charlotte AI Agentic Workflows under its security operations center, SOC.

EA: BofA positive .... raised its target multiple as game publishers have broadly re-rated due to perceived resilience to a recession, adding that it think EA Sports, which it ests drives greater than 80% of EA's consolidated EPS, is likely to remain resilient even in a consumer spending slowdown

NVDA: DigiTimes reports Co scraps modular GB300 redesign to fast-track production

NVDA/AI semis weaker: DeepSeek R2 AI Model Rumors Begin to Swirl Online; Reported to Feature 97% Lower Costs Compared to GPT-4 & Fully Trained on Huawei’s Ascend Chips https://wccftech.com/deepseek-r2-ai-model-rumors-begin-to-swirl-online/ [wccftech.com] .... shows big shift from US supply chain

TTWO: PT hiked at BofA - expects Take-Two to affirm GTA 6's Fall 2025 launch on the upcoming earnings call on May 15, which should ease some investors' concerns the game will be delayed given the lack of a second trailer this close to launch

UBER: CEO says the company is somewhat recession-resistant (Business Insider/Semafor)

ZS: +1% BNP upgrading - sees the company being "on the cusp" of top-line growth accelerating to mid-20

Industrials 

TSLA: contd upside momentum post last wk's 18% surge; ppl can now look forward to the upcoming catalysts. Co hikes prices in Canada (demand will be close to zero regardless)

BA – Berstein out ++…Also, Airbus agreed to take over some assets and sites from Spirit … clearing the way for Spirit to be bought by BA

Latest Media

Wall Street's Top Indicators Are Sending Mixed Signals.

Recession or Resilience?