Calendar

This Week – We have a Presidential Election and potential results, the Fed, and a crescendo of earnings cycle all working in the markets this week. We think energy stocks could be the most interesting play into a decision.

Wednesday – Election Results

Thursday – Fed Meeting (25 bps expected), Jobless Claims

Friday – 1 Fed Speaker.

Downgrades – INFN, RHP, CHH, ARIS, DBRG, MYE, CBOE, PTLO, GO

Upgrades – CE, YUNC, BEAM, CLX

Trading Observations

• A result.  Thats a win

• Smids should outperform on belief less regulation and easier M&A environment

• Do rates ultimately prove a damper?

• The question is whether Rs can win the house and pave the way to extend/cut tax rates

• Fed Thurs

• Will see if early gains hold, need a CLOSE above 5880 to give us blue skies, Smids a clear breakout....
  Lets let the euphoria settle, but should see a tailwind into year-end

• II Bulls slight downtick to 56.7% from 57.6%

• VIX crush now that election behind us

• Solar getting crushed - TAN -11%

Futures

DOW +1229

S&P +122

Nasdaq +351

10-Year Yield

Oil

Consumer/Financial Healthcare

Banks Higher on Trump and higher rates – XLF +5% -

SOFI +7%, BAC +6%, FMCC +59%, HBAN +7%, Many others

Bitcoin related up on Trump no regulation policies –

MARA, RIOT +8%, HOOD +10%, COIN +12%

Retail News-

Weak Comps at Portillos, PTLO, weak comps at RBI (Burger King, Popeyes, Firehouse Subs), YUM is doing fine, but store growth is a bit tricky, checks at LULU remain muted, and HD and LOW likely crush estimates on the hurricanes – All per Baird.

FIS – Baird calling it a “Bearish Fresh Pick” which means bet against it near-term.

Investment Banking deals for October were weak, but given election results, investors will anticipate the opposite as of this morning.

GEO – Up 26% - It’s for-profit prisons.

EXAS cut FY guidance. Mgmt noted atypical August-October Cologuard order seasonality, commercial execution challenges, hurricane impacts, and slower benefits from sales/marketing investments as culprits for the weakness. We believe yesterday's print likely dampens near-term sentiment and raises questions around the medium-term Screening growth outlook. – Baird

CELH -7% after revs disappoint.. the co recorded a small loss in the third quarter on a big drop in sales tied to inventory optimization by its largest distributor, PepsiCo.

LULU Baird Tracker – PT $380 from $350. checks remain muted in FQ3 with Y/Y declines in product availability similar to FQ2 and some deceleration in U.S. traffic/spending indicators. Lack of a clear inflection is consistent with management's more measured tone on H2, U.S. checks for FQ3 appear no worse than expected, and promotions appear well-managed. Net, we view FQ3 consensus as achievable.

Technology

AAPL: asks Foxconn to build AI servers in Taiwan using Apple’s own chips (Nikkei); tweaks language in its 10K to warn investors that future products may not be as profitable as the iPhone (FT) - NOT REALLY SURPRISING

AI names generally strong, potentially helped by PLTR blow out: MRVL +3% as investors liked read-through from ALAB; MU +3.5% getting its groove back (we continue to think r/r under $105 one of best in TMT); VRT +5%; NVDA +2.5%; TSM +1.9%; AVGO +3%

GOOGL: cont to lag as share loss worries continue to dominate investors minds

MCHP: -2.8% guides Q3 below (similar to most non-AI semis). Mgmt says current conditions remain difficult. Sees sales $1.025-1.095B (est $1.18B). Commentary: "saw heightened weakness in our Euro business which is concentrated w/ Industrial/Auto customers. While substantial inventory destocking has occurred, we continue to face macro uncertainties in what is historically our seasonally weakest qrtr"

QLYS: +21% solid revs/bilings beat; lifting guide; stock washed out into print ... Has been a great short, there were fears that risk/reward not as great here / espc with Software showing signs of life again as ppl no doubt feeling FOMO that missed the bottom

SMCI: -19% nasty cut to Q1; but GMs tracking aobve. Board’s special committee says there is “no evidence of fraud or misconduct on the part of management or the Board of Directors” and it expects to deliver its full report this week or next, although the company isn’t sure when it will be able to file its 10K ... CFO: “we're diligently looking to replace the auditor as quickly as possible and we will be filing a plan with NASDAQ and indeed regarding an extension.” SMCI/NVDA: Management didn’t give a timeline of when they can start booking Blackwell revs which they had mentioned before should be June. They are waiting for quick approval from Nvidia .... said the relationship with Nvidia has been for decades and remains strong with many co development projects so there has been no negative impact on allocation “at least for the moment”

SNOW shares are up 2.4% after Monness, Crespi, Hardt & Co. upgraded the software company to buy from neutral.

Industrials 

Celanese (CE) upgraded to buy from hold at Deutsche Bank

Cummins (CMI) downgraded to hold at Vertical Research

Myers Industries (MYE) downgraded to sector weight from overweight at KeyBanc

Solar/Renewable Energy names under extreme pressure following election results. The TAN Solar ETF is down (11%). Individual names: FSLR (14%), HASI (5%), RUN (18%), NOVA (22%), ARRY (12%), SHLS (14%)

WillScot Holdings (WSC) +6% after the bell yesterday, Bloomberg reported that Activist fund TOMS Capital has taken a stake in WillScot