Trading Observations

• Bullish tailwinds

  • China capital injection

  • Oil lower on Saudi production increase talk

  • And MU with a beat and raise (AI, Data Centers driving demand)

• PCE tomorrow,  Powell along with several Fed speakers today

• Not much data since FOMC last week, so shouldn't be anything market-moving

• Jobless claims touch light, GDP slight beat

• Still overbought (S&P oscillator drops to 6.05% but still above 5% headwind threshold), so will see if market holds and can build or we continue to digest recent gains

• S&P to open at new highs (5733/5690 support levels if reverses)

• IWM $225 a bit away, but still the big level to watch (quietly down 3% since last Thurs)

• SMH a CLOSE above $252 would be a higher high and flip the chart back to bullish

• Complacency back - the 10-day moving avg for EQUITY put/call is 0.56 - has only been lower twice in last few years - Mar 2022, and Aug 2023

Upgrades – BILI, CLDX, NYCB, MD, SBUX

Downgrades – AMP, FRO, GEHC, GPN, HSY, JWN, NTRS, PK, PAX, REG, RNW, RLJ, SONON, TNL

Futures

DOW +187

S&P +x46

Nasdaq +310

10-Year Yield

Gold

BITCOIN

Consumer/Financial/Healthcare

ACN – Accenture up 4% on solid earnings. Bookings strong. Organic revenue declined a bit, but the market doesn’t care.

RVs and Boats – August RV shipments were up 4% y/y (we’re a bit shocked), and powerboat retail was down 17% y/y (not at all shocking). YTD powerboat retail is tracking down 8%. THO guided cautiously in the RV space yesterday.

NKE – Baird earnings preview thinks they will beat low expectations.

NYCB – Upgraded at Barclays on setup.

KMX – Carmax down 6% despite beating estimates. I don’t see much negative besides wholesale car sales down 13% y/y and a frothy multiple.

Baird noting there is increased generalist interest in industrial real estate. Their favorites are FR, PLYM and EGP. The street tends to just buy PLD and be done with it though.

Diageo shares jump in London trading after the firm kept its near and medium-term financial guidance unchanged - WSJ

SBUX gains 3% in premarket trading following an upgrade to outperform from Bernstein, which says market optimism since the appointment of a new chief executive officer is fully warranted.

Technology

MU: +15% exploding above 50D/100D as not much to pick at ... beat + raise; saying all the right things (positioning neg) ... mgmt. highlights robust secular demand trends in AI and expects growth drivers to broaden in F25; raising its DRAM demand forecast. Expects health supply/demand in both NAND and DRAM in CY25

MU/Memory sympathy movers: HYNIX+9%, SAMSUNG+4%, WDC+7%, LRCX/AMAT+5%, ASML+4%, DELL/MRVL/INTC+3%, TSM+2.5%, AMD/SMCI/NVDA+2%. NVDA: +9%+ off Tues am lows

Semis: AI trade given huge boost from Micron as theme had been gaining momentum since NVDA surge began Tues am around 1045 ... semis vs software positioning cleanest its been in a while - will act as tailwind (Software recent bleed source of frustration)

MU CAPEX: CapEx for fiscal year '25 is expected to be up meaningfully; the majority of CapEx in '25 will be spent on supporting HBM (Hybrid Bonding Memory), incl facility construction, backend, and R&D

8 AI Websites that will supposedly help you finish 100 hours of work in 10 mins… Scribe, Agent GPT, Tripnotes, Gamma, Rose, Beautiful AI, Durable, Huberman AI

GWRE: Stifel positive commentary into 10/10 Analyst Day - "Cloud is just getting started with sizable multi-yr growth oppty (expect new feature announcements, data/AI monetization updates)"

META: hit fresh highs during Connect; said have almost 500mm Meta AI assistant users (last heard was around 400mm); Llama update solid

MSFT/GOOGL: Google filed an antitrust complaint in the EU against Microsoft, alleging the software firm engaged in uncompetitive practices in the cloud computing market (FT)

GWRE: Stifel positive commentary into 10/10 Analyst Day - "Cloud is just getting started with sizable multi-yr growth oppty (expect new feature announcements, data/AI monetization updates)"

JBL) shares are up 7.6% in premarket trading, after the manufacturing services company reported its fourth-quarter results and gave an outlook.

META) shares are up 1.7% in premarket trading, with analysts positive on the Facebook parent’s outlook in the wake of its Connect conference, which was seen as showing progress in its AI initiatives.

PLTR) shares are up 0.8% in premarket trading, after Wedbush raised its price target on the data-analysis software company to $45 from $38.

Industrials 

Aramark (ARMK) – stock trading +7% on report that Sodexo considering a possible acquisition of ARMK.

Baird NDRs Today: Hannon Armstrong (HASI) & Novanta (NOVT)

First Solar (FSLR) Rated New Buy at Truist Secs; PT $300

GE Vernova (GEV) Rated New Market Perform at Oppenheimer. Rated New Buy at Truist Secs; PT $300

Southwest Airlines (LUV) – Investor Day Today – Presentation published ahead of the event announces new $2.5B share repurchase program.

Wesco International (WCC) – provides update on financial targets ahead of today's Investor Day; reaffirms FY24 guidance - Consistent with prior expectations, over the long term WCC expects to achieve mid-single-digit organic growth, driven by a strategic shift into higher growth and higher margin end markets along with continued share gains.

LUV – resuming buyback program w/ $2.5B authorization; Investor Day starts at 10:30 …

CAT is mentioned positively in Barron’s, w/the article praising the firm’s recent actions to boost efficiency/margins while noting the strength in construction and forecasting an upturn in mining