Morning Note

Calendar

This Week – NVDA earnings, software earnings, and PCE are the must watch events. Retail earnings are the undercard.

Wednesday – NVDA earnings PM. HPQ and CRWD as well.

Thursday – Personal Consumption, Waller Speaks (possible next Fed Head). Earnings – DG, BBY, ADSK, ULTA, DELL

Friday – PCE (Fed cares here on inflation)

Trading Observations

• The morning action couldn’t be more boring as we await the final big announcement of the summer, NVDA earnings.

  • At $4.4T, the bar is high.

  • The spending in this area doesn’t seem to have slowed, therefore it feels very unlikely we see a miss.

  • The case for the market to be very disappointed exists but is in the 10-15% probability range to us.

  • The case for the market to “sell the news” feels a lot more likely as incremental buyers in NVDA have likely peaked, and SMH has a 22% position they will likely unload.

• NVDA has the ability to obliterate the fast money in the AI trade tonight, but we wouldn’t bet this is the quarter it happens.

Futures

DOW -9

S&P -4

Nasdaq -29

Financials / Consumer / Healthcare

DNUT – Downgraded to underweight at JPM given the insider holdings and companies inability to make money.

GS – Downgraded two German banks, Commerzbank to Sell and DB to Neutral.

KSS- Up 20% - Hey Kohls made money! Worries this was a spiral have slowed a bit and have shorts running as $0.56 in EPS beat the $0.29 estimate. Sales were good, although comp guidance of down 4-5% will likely put a cap on the positivity. It took 20 years for JCP to die, so these things take longer to play out.

ANF – Down 6%. Blaming tariffs.

CRBL – Up 4% after realizing they can’t beat the anti-woke mob and throwing in the towel.

LLY – HSBC upgraded the name on yesterday’s solid obesity pill data.

MCFT – MasterCraft up 11% on what I’m reading to be fairly lousy earnings compared to published expectations. High short interest and likely some retail players hoping for downside after boat sales have been weak covering.

Technology

MDB – Up 30% and likely to help the beleaguered software trade. Strong beat and raise with revenue growth of 29%.

OKTA- Up a less dramatic 5%, but also helpful for software. Department of defense was a positive. Might help PLTR today, but it was a large win for OKTA more than anything.

PYPL – Down 2% on some banks blocking payments after a security issues was going.

Industrials 

TYL – Baird calling it a Fresh Pick on the pullback as shares now trade at the low end of the historical valuation range.

FLY – Up 4% after receiving FAA clearance to resume launches.

BA – Bessent out negative saying they should be doing R&D not a buyback. Look for this to be the next “Trump Investment”.