Morning Note

Trading Observations

• Quiet overnight, ECB this morning with a cut baked in

• Jobless claims today ahead of the jobs data tomorrow

• Tax bill sausage making will be in the news until 'something' gets passed, and needs to happen relatively soon for tax planning purposes

• 6000 key resistance, if can CLOSE above sets up a run to the highs

• 5930-5940 first support zone

• AAII BEARS again outnumber bulls https://tinyurl.com/26797n58 [tinyurl.com]

• For the bulls, Global money supply growing at 8% https://tinyurl.com/53ajd3xu [tinyurl.com] 

• STM CEO yest saying chip demand is recovering, just as SEMIS vs. SPY has broken 10 month downtrend  https://tinyurl.com/3d4k5ncy [tinyurl.com]

• Short interest has diverged on SPY QQQ, potentially bullish https://tinyurl.com/2a8s932u [tinyurl.com]

• For the bears, Citi econ surprise index flipped back to negative https://tinyurl.com/34ehzpur [tinyurl.com]

Futures

DOW +88

S&P +13

Nasdaq +42

Charts/Sentiment

Financials / Consumer / Healthcare

BF/B – Brown Forman (Jack Daniels) down another 17% to fresh lows. Stock was $60 a year ago, today $27. Alcohol very competitive and GLP1s and competition is blowing up the post Covid business model.

COST – May Sales +6%, which is impressive except when you compare it to +8.5% in April and the company’s overall valuation.

Baird on US Banks – 10% below their fair value estimate. Positive bias.

LULU – Earnings tonight. Baird checks were constructive. They also like their ability to navigate pricing.

DLTR – JPM upgrading to overweight after management meetings. SSS were solid on traffic and price.

TSLA – Down 3% on Administration bridge burning.

CHWY – Down 3% on Jeffries downgrade.

V/Visa: upgraded @ Mizuho - "says its category analysis shows Visa's subdued excess growth versus U.S. personal consumption expenditures post COVID has largely been the result of vertical mix shit, as less card-based categories have outgrown more card-based categories post pandemic. Visa's cash-to-card runway still has legs"

Shein and Temu see a collapse in US demand following de minimis trade change – CNBC

UNH – Luigi supposedly said CEO “had it coming” according to prosecutors https://torontosun.com/news/world/luigi-mangione-wrote-united-health-executive-had-it-coming-da-says [torontosun.com]

WGO - guides Q3 revenue ~$775M vs est $809.6M

• Important Economic Data Last Two Days –

• ISM Services – Contractionary (barely)

• Unit Labor Costs – Hot at 6.6%.

• ISM Prices Paid – Hot at 68.7

• Initial Jobless Claims – Slightly higher at 247k.

• Conclusion – All bad news, none of it scary in its voracity.

Technology

AAPL | WWDC WHAT TO EXPECT: https://www.macrumors.com/2025/06/02/macos-26-tahoe-what-to-expect/ [macrumors.com]

AMZN: experimenting with using humanoid robots to deliver customer packages (The Information)

ANET is mentioned positively in Barron’s, w/the article recommending investors buy the stock given robust growth and a competitive moat

AVGO: #s tonight / 6.5% implied. Positioning #1 concern. Sentiment extremely bullish (rightfully so); Hock's $10B buyback in early Apr reinforced bull case. Expect continued AI growth, stabilization in the core semis business, and further optimization of the VMware portfolio ... Custom Silicon should benefit from the Google TPU ramp (Meta and ByteDance also shipping in volume); bulls excited about growing ASIC momentum as Broadcom last quarter announced an additional two hyperscale ASIC opportunities (now seven total engagements, only three of which are included in its 2027 $60-$90B SAM)

CHWY: -2.4% alpha laggard as Jefferies downgrading - "firm says that while the pet macro environment looks relatively stable, and Chewy is performing well, a CFO change is underway and the shares already reflect the positives;

CIEN: -10% first prints as margins healthy miss. Positive fluff commentary in release: "With accelerating demand driven by cloud and AI, our performance is validating the durability of a positive network infrastructure spend environment. As a result, we have strong visibility and are very confident in both our contd growth and our ability to drive additional operating leverage over time"

CSCO: “‘Networking is cool again’—web-scale training clusters, enterprise inference fabrics and sovereign AI clouds create multi-year, multi-TAM tailwinds, this is ‘not a step-function then flat.’”

MSFT: believes the massive AI models made by the likes of OpenAI are becoming increasingly commoditized and as a result, the firm is aggressively shifting its focus to providing companies w/the tools to build applications (aka agents) on top of those models (The Information)

MU: +1.7% Mizuho bullish ystrdy + strong px action overnight in Asia ... Mizuho sees industry HBM rev growing 55% annually through 2027.

RDDT: cont to grind higher / falling into bucket of ppl looking for slightly improving narratives in names not at highs. Only headline saw that Co suing Anthropic / value here and mgmt has sounded good on the road

Semi Build: GFS/GlobalFoundries plans to spend $16B to boost domestic production, including $13bn to expand existing plants in New York and Vermont and $3 billion for research into advanced packaging and other technologies in the US

VRNT: +19% decent upside in FQ1 on EPS/rev; ARR growth accelerated (AI ARR growth accelerated to 24% and AI is now close to 50% of total ARR). FY guide mostly unch despite beat - mgmt acknowledges that the upside was driven by the timing of two unbundled SaaS deals

TXN: Bernstein upgrading - says the GM thesis that was key to its 2023 downgrade has mostly happened. Meanwhile, a cyclical recovery may be starting, and Q3 estimates for TI appear unaggressive

Industrials 

TSLA – ELON says KILL THE BILL… Under the bill passed by the House, the consumer tax credit for new electric vehicles (worth up to $7,500) would phase out after 2026. But for most vehicles, it would actually become unavailable at the end of 2025, because it would only be available for vehicles made by automakers that have sold fewer than 200,000 EVs. So yes, Elon throwing becoming unhinged https://www.npr.org/2025/06/03/nx-s1-5414604/ev-tax-credits-republican-bill [npr.org]

BrightView Holdings (BV) announces 11.6M common shares for holder priced through KKR, Craig-Hallum, BTIG, Morgan Stanley and Loop Capital.

FAST reports May ADS +9.3%, compared to Baird expectations of +10.9%.

Ferguson (FERG) Cut to Hold at Berenberg

Parker-Hannifin (PH) Rated New Equal-Weight at Morgan Stanley

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