Morning Note

Calendar

This Week –

Thursday – Jobless Claims (this matters if they tick up), Home Sales, 5 Fed Speakers, BBY, DELL, COST, ULTA, NTAP earnings

Friday – Core PCE (Fed watches this one)

Trading Observations

• Strong rally on court decision, however, certainly not the end of the story

• Trump will challenge and other levers to pull https://tinyurl.com/4bvtxsb8 [tinyurl.com]

• Will countries back away from deals in the pipeline? Not free and clear just yet

• NVDA + CRM strong earnings should help AI/data center and software themes

• AI + VEEV also up big, HPQ down big

• A close above 5968 would be a higher high and appease technicians with 6000 as bigger resistance

• Heading into today, breadth has been negative 6 of 7 days (and now starting to push into mildly short-term oversold area)

• AAII Bulls drop to 32.9% and still well below bears despite the rally

• Fuel for a continued rally https://tinyurl.com/43rk5v8w [tinyurl.com] 

• BKNG doesn't suggest consumer slowing down https://tinyurl.com/azyn7f7t [tinyurl.com] 

• Housing continues to be a headwind https://tinyurl.com/42at6nbz [tinyurl.com]

Futures

DOW +96

S&P +46

Nasdaq +281

Charts/Sentiment

Financials / Consumer / Healthcare

KSS – Up 6% - Solid beat of previous releases. Nothing new on the CEO front. There are 55MM shares short, and a massive 18k call spread that went off yesterday to deal with in terms of supply and demand. Our guess is the shorts largely cover, but the negative 4% y/y growth won’t make them panic.

ELF – Up 15% on earnings and a deal to make the Beiber’s even wealthier. Hailey’s cosmetic line is to be purchased for up to $1B, which is a pretty big tuck in for the $5B, $1.5B in revenue company. Feels short squeezy to me.

Visa – Saying May volumes tracking in-line with April.

BBY – Down 2.5% on EPS miss that blames tariffs.

GPN – Announced a $1.1B sale of its payroll business, which should help EPS ~$0.10.

Citi – Saying “clarity from Trump would unleash the IPO markets”.

YUMC – Approved a $510MM 2H buyback.

BURL – Up 8% on solid earnings. Sees 2Q sales 5-7%, which is impressive.

Technology

NVDA: +6% impressive guide DESPITE massive China headwind; commentary extremely supportive (no shocker). Q1 revs inline w/ bogeys; Non-GAAP GM fell to 61% (vs ~70 % expected), but normalizes to 71.3 % once the $4.5 bn H20 write-off is removed—slightly ahead of the ~70½ % buy-side bogey .... Q2 rev guide $45B where needed to be - Blackwell filling gap faster than feared. Sees GMs 72% (ppl want to hear path back to mid-70s as well) ... Mgmt talking about strong GB ramp up in supply chain. $50bn lost TAM in China. Reasoning models driving an inflection in inference which Nvidia expects to dominate

SMH +3.7% .... CRDO+7%, MRVL +6.5% (strong in alpha Wed too), VRT/ALAB/COHR+5%, CLS/SMCI/ARM+4%, AVGO/AMD/MU+3.5%, ASML+2.4%, TSM+1.6%

AI Complex: any names touching AI leading tech early .... CRDO+7%, MRVL +6.5% (strong in alpha Wed too), VRT/ALAB/COHR+5%, CLS/SMCI/ARM+4%, AVGO/AMD/MU+3.5%, ASML+2.4%, TSM+1.6% ....

CRM: +0.1% not clean (oper margins; Q2 cRPO guide in single digits). Become bit more crowded given lrg cap SW fueled by MSFT, NOW T+1 reactions ..... Q1 cRPO beats at 11% vs street at 10% and bogeys of 10.5%-11%, but Q2 cRPO only 9% vs street at 9.2% cc and bogeys closer to 9-10%; Revs better but margins a bit lighter ... Data Cloud and AI annual recurring rev over $1B, about in line with bogeys .... FY raised to $41-$41.3B vs prev $40.5-$40.9B as the buildout of its Agentforce strategy accelerates as CRM starts to capitalize on its agentic AI strategy

c3.ai/AI: +12% few cents of FQ4 EPS upside; sales ~inline. Guide for F26 is about inline on sales at the mid-point ($46MM vs St $465.5M) and ahead on oper income. Announced a multi-year renewal and expansion of its JV with BKR (Baker Hughes), taking it to 2028

CDNS/SNPS: both drilled in pm trade as Trump administration has told US companies that offer software used to design semiconductors to stop selling their services to Chinese groups, in the latest attempt to make it harder for China to develop advanced chips (FT) .. saw HF supply in each

DKNG (DraftKings)/FLUT (Flutter): the online sports betting giants are facing a powerful competitive threat from prediction markets like Kalshi (FT)

TSLA: +2.5% Musk officially packing up Oval Office sleeping bag - Ives take = another positive for bull camp: https://wedbush.bluematrix.com/links2/pdf/e87800e5-b35a-4b14-82aa-9eb1d4b19b18 [wedbush.bluematrix.com]

TSLA/UBER: expect spread to narrow further into June 12 FSD launch; UBER has outperformed Tesla by 65% since mid-Dec ... with Musk officially departing WH, will only fuel Tesla/retail bulls

Industrials 

JetBlue shares are up 1.5% in premarket trading on Thursday after the airline announced a partnership with United Air that will allow travelers to use loyalty points and book flights across the two carriers. United shares rise 1.6% before the bell.

Latest Media

Wall Street's Top Indicators Are Sending Mixed Signals.

Recession or Resilience?