Morning Note

Calendar

Friday – 3 Fed Speakers (plus Powell Sunday)

Trading Observations

• Tough morning to start with tariff talks with Apple and EU.

• Disappointing close despite yields backing off after what looked like a constructive day

• Perhaps this the culprit and people getting out ahead of things ahead of the long weekend 

• "US Pensions are modeled to SELL $19bn of US equities for month-end. $19bn to sell ranks in the 89th percentile amongst all buy and sell estimates in absolute dollar value over the past three years" per GS

• Big picture still the same... as long as 5750 holds, constructive,  5900 now first resistance with 6000 the bigger hurdle

• AMZN CEO Andy Jassy said the firm has not cut capex and that the extraordinary spending on AI will end up making shareholders very happy, during a virtual conference, media report

• Trump also said tariffs have not caused consumers to cut back spending, nor “seen any meaningful average selling price increases.”

• McClellan oscillators dips below zero line a short-term headwind https://tinyurl.com/mrywd875 [tinyurl.com]

• Yet put buying skyrocketed https://tinyurl.com/mv54m77n [tinyurl.com] 

• STAT of the day https://tinyurl.com/2ces4a4t [tinyurl.com]

Futures

DOW -556

S&P -88

Nasdaq -401

Charts/Sentiment

Financials / Consumer / Healthcare

Crypto-linked stocks fell in premarket trading on Friday as Bitcoin prices fell as much as 3.4%, as investors pulled back from risk assets after US President Donald Trump threatened a 50% tariff on the European Union starting in June.

F DECK – Down 20% - UGG winning, HOKA losing. HOKA +10% isn’t terrible, but ONON eating some lunch.

ROST – Ross Stores Down 12% - Pulled its guidance on tariffs. That hasn’t gone well all earnings season, so I’m not sure why management teams are doing it. Sales +3% y/y, comp sales guided +0-+3% is nothing to get excited about, especially in a 24x P/E stock.

ULTA – JPM earnings preview positive on setup and expectations as they raise numbers.

AZO – Defended at JPM in a positive preview.

GS on Sunbelt Apartments – Positive on MAA and INVH. Read throughs for AMH solid. 2025 a transition year. Lack of supply helps 2026 estimates.

Technology

Tesla (TSLA) -2%, Alphabet (GOOGL) -1.6%, Nvidia (NVDA) -3%, Amazon (AMZN) -2.7%, Meta Platforms (META) -2.2%, Microsoft (MSFT) -1.8%

Tech EPS Ahead: 5/27 (BOX, OKTA, SMTC); 5/28 (AI, CRM, HPQ, KC, NCNO, NTNX, NVDA, PLAB, PSTG, S, SNPS, VEEV); 5/29 (AMBA, BBY, DELL, ESTC, LI, MRVL, NTAP, PATH, PD, ZS)

AAPL) drops 3.7% after Trump threatened 25% tariffs on the company if iPhones aren’t made in the US.

AAPL: Apple planning release of smart glasses by end of 2026 with camera, microphone and speaker capability (Bloomberg); offering additional trade-in discounts for new iPhones in China until 18-Jun (CNBC, Reuters)

AAPL chain: Foxconn moving ahead with $1.5B Apple component plant in India following Trump's demand for to return manufacturing to US (FT)

ADSK: +2% reported decent FQ1 upside on EPS w/ beat driven by higher sales/oper margins (37% vs. the Street 35.3%) while billings inline. FY guide is increased.

STX: another fail at $110 ystrdy but Analyst Day only reinforces bull case (first since 2021). HAMR commentary bullish + CFO lifted #s + $5B buyback. Seeing ests lifted on Seagate's increased rev/profitability

NVDA: Nvidia may face AI spending cuts from cloud firms while aiming to expand with NVLink Fusion (Reuters) .... Fubon commentary saw ystrdy - (1)the ramp up of GB200 is improving and got the same feedback from meetings with Wistron and Supermicro - ppl saying rack numbers are now too low; (2)GB300 should begin ramping late August/early April

INTU: +8% strong Q across board / margins ahead by 200bps. Mgmt cites an “outstanding tax season” and “contd momentum in our Global Business Solutions Group and Credit Karma. Looking at individual businesses, Credit Karma posted very strong sales upside (+31% to $579MM vs. the Street $462MM). Q4 guide is ahead. Seeing a relatively stable environment for its customers (most of its business customers tend to be services firms and so have less exposure to tariffs)

PLTR – Big insider sale – Bloomey

XRX declines 8% after the company cut its quarterly dividend to 2.5 cents per share ahead of the Lexmark deal closing.

WDAY -6.5% hit post sizable billings miss and implied guide down, despite the stronger margins and FCF upside. Bit of battleground stock coming into print, that view unlikely to shift .... signs of continuing deceleration through Q2 and only modest changes to estimates from guidance

Industrials 

Auto headlines: (1)BYD sold more EVs in Europe than Tesla for the first time ever last month (Bloomberg) .... (2)GM is capturing more EV share in the US and now accounts for ~15% of the market (Electrek)

GFL Environmental (GFL) Cut to Neutral at JPMorgan

Nuclear power stocks climb after Reuters reported that Trump will sign executive orders that aim to jumpstart the industry by easing the regulatory process on approvals for new reactors and strengthening fuel supply chains.

• Constellation Energy (CEG) +1.9%, Oklo (OKLO) +8%, Nano Nuclear Energy (NNE) +8%

SolarEdge (SEDG) Raised to Market Perform at Northland

Sonoco (SON) Raised to Overweight at Wells Fargo; PT $55

WM (WM) Raised to Overweight at JPMorgan; PT $277

Latest Media

Wall Street's Top Indicators Are Sending Mixed Signals.

Recession or Resilience?