Morning Note

Calendar

Monday: Japan Carry Trade

Tuesday: Trade balance, CAT, TAP, YUM, UBER, ABNB earnings

Wednesday: HLT, DIS, LYFT earnings

Thursday: Jobless Claim, Fed’s Barkin

Friday: Weekend 

Trading Observations

• Despite another attempt being thwarted at resistance to break out, the 6860-7000 range still firmly entrenched

• Jobs pushed rate cuts out, can CPI pull them back?

• Earning: MCD higher. CSCO lower (margin pressure due to memory prices)

• Software mixed as FSLY + HUBS up, APP lower despite beat and modest raise

• Big spike in new highs https://tinyurl.com/yvyk3kss [tinyurl.com]

• Short-term oscillator pushing further overbought

• RSP testing levels that have led to pullbacks in the past https://tinyurl.com/fckkrmwy [tinyurl.com]

• Put buying elevated, especially on Nazz https://tinyurl.com/223z422m [tinyurl.com] 

• AAII Bulls drop to 38.5% and bears JUMP to 38.1% from 29%

• Tech short interest at very elevated readings https://tinyurl.com/3dhet34t [tinyurl.com]

• One encouraging nugget out of jobs report.... over half of the subindustries now hiring https://tinyurl.com/6uvr3f6d [tinyurl.com]

• On a Global basis, not just earnings, dividends and buybacks also advancing https://tinyurl.com/4fwcyk3n [tinyurl.com]

Futures

DOW +138

S&P +22

Nasdaq +87

Charts/Sentiment

Financials / Consumer / Healthcare

JPM – Trump asks Jamie Dimon to lower credit card rates again. Navarro was on the mike this time.

PFE – Downgraded to neutral at Daiwa.

CROX – Up 14% - Solid beat across the board. Very well run company. Should have been a fad.

MCD – Up 1.5% on fine earnings. $5 value meal push helping traddic.

VVV – Downgraded to underweight at JPM.

UTZ – Down 6% on pretzels being too dry, bad earnings, and Dots eating their lunch.

Crypto reprieve – Up 1-2% to start the morning.

BBIO – Up 15% on solid results for its Dwarfism drug.

ICLR – Down 33% - An accounting probe was launched, which is always shoot first, as questions later.

MELI: +3% upgraded @ JPM - cites valuation for the upgrade following the stock's recent underperformance. Shopee increased its take rates last week, signaling a more benign competitive environment. Also no longer sees material downside risk to consensus ests for 2026 and 2027

Technology

AAPL: AI/Siri headlines led to wobble in pm session Wed - as Bloomberg reported that the new AI siri might be pushed back as they’ve run into snags during testing in recent weeks

Anthropic: nearing $20B funding deal, could double valuation to $350B with backing from key investors (Bloomberg) ... positive ZM bankshot

APP: -4.5% solid Q4; guided Q1 to 5-7% but not great reaction given recent performacne ... Commentary around e-coM a bit squishy .... CEO downplays AI threat to advertising platform, expects benefits from advanced AI models

CGNX: strong upside in Q4 on EBITDA ($57.3M vs St $45.5M), w/the beat driven by higher sales ($252.3M vs St $240M) and margin expansion (EBITDA margins came in up 420bp Y/Y), and the Q1 guide is bullish (they see sales and EBITDA margins of $245M/20.5% vs St $230M/17%)

CHKP: -4% below buy side expectations

CSCO: -7% hit on weaker GMs. AI rev strong at $2.1b vs $1.3B BUT bulls wanted a more aggressive FY lift closer to +9% y/y. Refresh cycle thesis intact, but margin compression takes some shine off ... Margin issues will fuel concerns about memory prices hurting the profitability of hardware OEMs

CSCO addtl: company is enjoying top line momentum – in addition to the 10% sales increase, product orders were up 18% Y/Y with networking product orders accelerating to more than 20% Y/Y (mgmt. talks about accelerating AI infrastructure orders from hyperscalers and a multi-year, multi-billion-dollar campus networking refresh cycle underway)

CSCO negative bankshots: HPE, HPQ, DELL, LOGI down 2% to 3% ... note Lenovo red flag as well

DUOL: shorts cont to press ... T-mobile set to begin AI translation for Phone Calls

FSLY: +39% BLOWOUT beat + raise; AI as a growing tailwind. Record rev, gross margin, and operating profit in Q4. Strong guide for FY with meaningful upside to Street on both lines / rev accelerating for 4th consec qrtr. Key: growth cont to accelerate following a sales force reorganization and management change that’s driving improved execution, which can continue as AI provides a strong tailwind

META: Pershing Square disclosed a large position in Meta (~10% of Pershing’s capital as of the end of ’25) and called the stock undervalued (CNBC)

MSTR: Strategy to issue more perpetual preferred stock to ease investor concerns

MU: +10% ystrdy post bullish presentation @ Wolfe in pre. Sounded great / defended HBM tech. "Demand is significantly higher than our/industry’s ability to supply ... Tight beyond 2026 .... Doing everything we can for customers needs over time ... Making good progress on multi year agreements with specific commitments"

SHOP: ugly T+1 reversal ... TD Cowen upgraded last night - cites valuation. "Strong quarter, contd growth momentum and the post-earnings pullback represents an attractive entry point for investors to own the de facto modern-day eCoMerce infrastructure"

SMR: NuScale Power To Partner With Oak Ridge National Laboratory To Utilize AI-Enabled Nuclear Design Framework For 12-Nuscale Power (Bberg)

SNAP: Citi negative - company's model pos the Q4 report Snap is facing continued brand advertising headwinds

TYL: -7% miss on Q4 rev/EBITDA; guide inlinish

Industrials 

BorgWarner (BWA) upgraded to buy from hold at Deutsche Bank

Generac (GNRC – RVER position) downgraded to neutral from buy at Guggenheim Securities. Reiterated buy PT $260 at ML. Baird also Bullish and see further upside.

Rollins (ROL) downgraded to equal weight from overweight at Wells Fargo Securities

Ryder (R) downgraded to hold from buy at Vertical Research

Sterling Infrastructure (STRL) initiated buy at Stifel

Strattec Security (STRT) downgraded to hold from buy at Freedom Broker

Latest Media

River1’s CIO on Schwab Network

Levered ETFs, market perspectives, etc.