Friday Watch

Around X:

• @Business  

• Trump's latest threat to seize Kharg Island, followed by an abrupt reversal, reflects his dilemma: How to end an unpopular war against a stubborn enemy in a volatile region of the world. 
• Investors across Asia have been largely shut out of the world’s largest-ever IPO, forcing them to find creative ways to make bets on SpaceX’s $75 billion global spectacle.
• Billionaires are leaving California for Nevada, angry at attempts to tax them. Some Golden State voters are also fed up.
• A small number of firms are set to net tens of billions of dollars in returns from the SpaceX IPO. 
• Lawmakers and tech firms are suggesting new ways to ensure the public gets a piece of the AI boom. 
• Here’s the latest news and analysis on the oil market.
• Get up to speed on what's moving global markets.
• Here’s what you need to know to start your day.

• @ZeroHedge

• BREAKING: Massive fire erupts from a medical supply warehouse that can be seen for miles in Tracy, California. The fire is at the Medline warehouse, one of the largest medical supply distributors, which ships products to hospitals and healthcare facilities across the country. Multiple agencies and firefighters are working to get the blazing building under control, as investigators try to find the cause of the fire.
• Fed Up With Food Delivery App Fees & Tips? Barclays Has Terrific News.
• Middle Schoolers' Reading & Math Scores Remain Below Pre-Pandemic Levels, US Results Show. 
• *KOREA’S KOSPI EXTENDS GAIN TO 8% AS CHIP STOCKS SURGE. 
• This is correct. The @SECGov just sold out the retail investor so they could move forward with their tokenized Field of Dreams. 
• "It Was Like Two Bucks": Homeless Residents Say They Were Paid To Vote In Los Angeles Mayoral Race. 
• *TRUMP: ENDED WAR WITH IRAN TODAY.
• *TRUMP: TODAY WE SETTLED UP WITH IRAN. *TRUMP ON IRAN: PRETTY MUCH COMPLETED. *TRUMP ON IRAN: WE GOT EVERYTHING WE WANTED.
• Cato Vs Heritage: Should The U.S. Defend Taiwan From Chinese Invasion?
• Hunter Biden says he'd run in 2028 with Gavin Newsom, but only as VP.
• Trump Nominates US Attorney Jay Clayton As Director Of National Intelligence.
• Token prices down 2.8%, lower 8 days in a row.
• Polls Turn Against Netanyahu As Trump Says PM 'May Quit Politics'.
• The intrigue: Netanyahu did not have advanced notice and was caught by surprise when Trump released his initial statement about the deal, according to a source with knowledge.
• Karen Bass' Brother Joins Class-Action Lawsuit Against Karen Bass over LA Wildfires.
• New CFTC Prediction Market Proposal Would Ban War And Terrorism Bets While Allowing Sports Markets.
• Even 'Trust The Election' Pundits Are Suspicious.
• *TRUMP: I UNDERSTAND THAT SUPREME LEADER HAS APPROVED DEAL. *TRUMP: LIFTING BLOCKADE IS PART OF IRAN DEAL.
• TACO Thursday Trumps Hot-flation & ECB Hike, Sending Stocks & Bonds Soaring Ahead Of SPCX Launch.          

• @CNBC

• CNBC Daily Open: Markets score big as Iran war nears final whistle and SpaceX takes the field. 
• Friday's big stock stories: What’s likely to move the market in the next trading session.
• Stock futures are little changed as Wall Street gears up for SpaceX’s historic IPO: Live updates.
• What energy insiders in DC are saying about oil prices and a possible Iran deal.
• President Trump: 'Will probably have a signing for Iran deal, maybe in Europe'.
• Ex-Andreessen Horowitz partner slams his old firm, other VCs for 'political infiltration' around AI.    

• @TheTranscript

• RH CEO: "Nearly 40 years ago, standing at the Brandenburg Gate, a former American president looked out at a divided world and issued a defiant, historic decree: 'Mr. Gorbachev, tear down this wall.' Today, we look at the luxury home industry and ask the same."
  $RH: +0.4% AH.
• Adobe CEO: "Adobe delivered record revenue of $6.62 billion in Q2 reflecting strong AI-driven demand across our customer groups and we are raising our full-year fiscal 2026 revenue and non-GAAP EPS targets on the strength of that performance".
  $ADBE: -6% AH. 

Night Trading 

• Asian equity indices are +1.5% to +2.5% on average. 
• Asia Ex-Japan Investment Grade CDS Index 71.75 -2.0 basis points. 
• China Sovereign CDS 39.5 -.75 basis point.
• China Iron Ore Spot 101.60 USD/Metric Tonne +.3%. 
• Crude Oil 86.76/bbl. -1.1% 
• Gold 4,212.20 USD/t oz. +2.4%. 
• Swiss Franc/Offshore Chinese Renminbi Cross 8.50 +.08%.
• Bloomberg Emerging Markets Currency Index 35.11 -.07%.
• Bloomberg Global Risk-On/Risk Off Index 120.9 +.7%.
• US 10-Year Yield 4.47% +1.0 basis point.
• Japan 30-Year Yield 3.82% -7.0 basis points. 
• Volatility Index(VIX) futures 20.5 +.1%.
• Euro Stoxx 50 futures +1.6%. 
• S&P 500 futures +.11%.
• NASDAQ 100 futures +.17%.

Morning Preview Links

BOTTOM LINE: Asian indices are higher, boosted by technology and industrial shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher.  The Portfolio is 100% net long heading into the day.

Stocks Surging into Final Hour on Mideast War Resolution Hopes, Plunging Long-Term Rates, Earnings Outlook Optimism, Tech/Defense Sector Strength

Economic/Market Gauges:

• North American Investment Grade CDS Index 51.2 -2.7%
• BofA Private Credit Proxy Index 71.8 +.2% 
• Bloomberg US Securitized MBS/ABS/CMBS Avg. OAS .25 -2.0 basis points
• BofA Global Financial Stress Indicator -.15 +7.0 basis points
• European Financial Sector CDS Index 56.7 -.6%
• Emerging Market CDS Index 149.3 -2.4%
• Israel Sovereign CDS 48.6 -6.2% 
• Bloomberg Global Trade Policy Uncertainty Index .7 -.3
• US Morning Consult Daily Consume Sentiment Index 89.3 +1.4

• Citi US Economic Surprise Index 55.4 -3.3

• Citi Eurozone Economic Surprise Index -43.2 +1.0

• Citi Emerging Markets Economic Surprise Index 44.7 +1.4
• S&P 500 Current Quarter EPS Growth Rate YoY(498 of 500 reporting) +27.9% unch.
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 364.11 +.21:  Growth Rate +23.8% +.1 percentage point, P/E 20.1 unch.
• S&P 500 Current Year Estimated Profit Margin 15.48% unch.
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(10 of 10 reporting) +66.6% unch.
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 908.23 +.76: Growth Rate +75.1% +.1 percentage point, P/E 18.3 -.2 
• Bloomberg US Financial Conditions Index .90 -6.0 basis points
• US Yield Curve 39.75 basis points (2s/10s) -1.75 basis points
• Bloomberg Industrial Metal Index 179.3 +.3%
• Dutch TTF Nat Gas(European benchmark) 48.30 euros/megawatt-hour -3.4%
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 13.5% -.1 percentage point
• US Atlanta Fed GDPNow Q2 Forecast +3.3% unch.
• US 10-Year T-Note Yield 4.45% -10.0 basis points
• 1-Year TIPS Spread 2.47 -10.0 basis points

• Highest target rate probability for July 29th FOMC meeting: 88.5% (+1.3 percentage points) chance of 3.5%-3.75%. Highest target rate probability for Sept. 16th meeting: 69.1%(+8.4 percentage points) chance of 3.5%-3.75%. (current target rate is 3.5-3.75%)
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +1,920 open in Japan 
• China A50 Futures: Indicating -92 open in China

• DAX Futures: Indicating +346 open in Germany

Portfolio:

• Higher: On gains in my tech/consumer discretionary/industrial/biotech sector longs
• Disclosed Trades: Covered some of my (IWM) hedges and emerging market shorts
• Market Exposure: Moved to 100% Net Long

Bull Radar

Style Outperformer:

• Small-Cap Growth +2.0%

Sector Outperformers:

• 1) Semis +5.9% 2) Defense +4.9% 3) Airlines +4.7%

Stocks Rising on Unusual Volume:

• VELO, ATEX, VOYG, FLY, MBX, LUNR, ASYS, PICS, CPNG, ELVN, BBAR, NAVN, GRRR, RDW, SUPV, ATRO, UEC, ADPT, KLAC, LRCX, WGS, UCTT, TEO, BMA, TSAT, VPG, CXT, GGAL, LQDA, LOMA, AMAT, NRIX, ALM, TGS, SHAZ, CRESY, CRDO, IDCC, BTDR, SATS, VSH, STM, IREN, DAKT, CMCO, MTRN, FLNC, SVM, FOUR, MRVL, PDFS, ASML, PAM, DXYZ, SEPN, ARQT, UNIT, MAMA, IAG, M, UNIT, MDA, SEPN, MNRO, HNGE, OFRM, BNED, KTB, QXO, INTC, PRE, INTC, CAKE, MT, CIB, HOOD, BROS, ERO, DCO, CEPU, IRDM, IIPR, DQ, MEC, SW, IIPR, CEPU, DCO, ORLA, ASX, EVTC, MMYT, CDE, BAP, AMGN, PLAY, KRUS, PWP, SMCI, GEV, CRNC, AXIA, AZZ, DCTH, AU, AMRX, BFH and CHEF

Stocks With Unusual Call Option Activity:

• 1) ALB 2) GILD 3) PRMW 4) PAYO 5) WMB 

Stocks With Most Positive News Mentions:

• 1) PPCB 2) KLAC 3) SFIX 4) NAVN 5) SNDK

Sector ETFs With Most Positive Money Flow:

• 1) SOXX 2) ARKK 3) DRAM 4) IGV 5) NASA

Charts: 

• ETFs Rising on Unusual Volume
• Stocks Rising on Unusual Volume

Tomorrow's Earnings/Economic Releases of Note; Market Movers

Earnings of Note 
Company/Estimate 

Before the Open:

• None of note

After the Close: 

• None of note

Economic Releases 

8:30 am EST

• Univ. of Mich. Consumer Sentiment Index for June is estimated to rise to 46.0 versus 44.8 in May.
• Univ. of Mich. 1Y Inflation Expectations Index for June is estimated to rise to +4.9% versus expectations of a +4.8% gain in May. 

Upcoming Splits

• KLAC 10-for-1

Other Potential Market Movers

• The US Baker Hughes weekly oil rig count, weekly CFTC speculative net positioning reports, (BBY) annual meeting, (TOST) annual meeting, (REGN) annual meeting and the (FTNT) annual meeting could also impact global trading tomorrow.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running -8.7% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 13.9 +1.1
• 7 Sectors Rising, 4 Sectors Declining
• 61.3% of Issues Advancing, 36.5% Declining 
• TRIN/Arms 1.19 +30.8%
• Non-Block Money Flow +$225.5M
  
• 79 New 52-Week Highs, 64 New Lows
• 52.6% (unch.) of Issues Above 200-day Moving Average
• Average 14-Day RSI 51.0 -1.1

Polymarket: 

• Will China invade Taiwan by end of 2026? 6.0% -1.0 percentage point
• Trump announces US blockade of Hormuz lifted by June 30th 25.0% -8.0 percentage points
• US x Iran permanent peace deal by June 30th 16.0% -1.0 percentage point 
• US announces new Iran agreement/ceasefire extension by June 30th 35.0% -1.0 percentage point
• US Invades Iran before 2027 26.0% +8.0 percentage points

Other:

• Bloomberg Global Risk-On/Risk-Off Index 119.6 +.6%
• Global Monitor Iran Instability Index 66.0 +1.0
• Strait of Hormuz Oil Tanker Traffic Curtailed Estimate 96.0% -1.0 percentage point
• US High-Yield Tech Sector OAS Index 445.25 -.25 basis point
• Bloomberg Cyclicals/Defensives Index 252.4 +.5%
• Morgan Stanley Growth vs Value Index 153.3 +.8%
• CNN Fear & Greed Index 27.0 (FEAR) -2.0
• 1-Day Vix 19.9 -16.6%
• Vix 21.4 -3.6%
  
• Total Put/Call .89 -3.3%

Thursday Watch

Around X:

• @Business  

• The US military said it had launched strikes against “multiple” targets in Iran for the second day in a row after Trump accused the country of dragging out talks on an interim peace deal. 
• South Korea and the EU said North Korea will “never” be recognized as a nuclear-weapon state, reaffirming their commitment to denuclearization days after China and North Korea pledged closer ties at a summit.    
• Canadian Prime Minister Mark Carney’s government has introduced legislation that would ban youth under the age of 16 from using social media platforms operated by firms such as Meta and X unless the companies meet a set of "safety" standards. 
• Get up to speed on what's moving global markets.
• Here’s what you need to know to start your day.  

• @ZeroHedge

• Trump Says 'We'll Bomb The Sh*t Out Of Them' Tomorrow Too If No Deal, After Dozens Of Tomahawks Hit Iran.               
• *OpenAI Price Cuts Could Threaten Margins, Profits Ahead of Potential IPO, Sources Say -- WSJ. 
• *OpenAI Expects Anthropic to Reduce Prices After Some Users Balk at AI Costs, Sources Say -- WSJ. 
• MSFT Restricts Internal Use Of Claude Fable Over Data-Retention Concerns; BMO Calls Anthropic A Leading Pure-Play AI Lab.
• *IRAN SAYS TARGETS US FIFTH FLEET IN BAHRAIN: PRESS TV.
• JPMorgan: AI Bills Are Out Of Control.
• Kospi VIX: 88.
• ... make that 7 days. Token price index slide back to mid-January levels, fading much of the agentic frenzy of the past 3 months.
• From FOMO To Oh No! Koreans Face Massive Forced Liquidations As AI Bubble Bursts.
• Trump's claim Iranian officials spoke with him directly and asked the bombing to stop is completely false, no contact has been stablished with Trump; Iran responds to aggression with military action: Tasnim.
• Iran Revolutionary Guard Navy Commander: Any ship traffic in the Strait of Hormuz will be dealt with firmly.
• *TRUMP TELLS FOX NEWS IRAN BOMBING WILL STOP SHORTLY, LEAVES OPTION FOR MORE STRIKES.
• Iran announces the Strait of Hormuz is declared closed to all types of vessels: ISNA.
• Goldman Flags Tightening Power Grid In Texas Amid Rapid Data Center Growth.
• The scary part isn't volatility. It's how little it takes to create it. Markets increasingly resemble a giant short-gamma ecosystem where relatively small flows can produce outsized price moves.
• Explosions reported in Iranian towns of Sirik, Manab, Bandar Abbas and Bushehr.
• RFK Jr. Responds To "Explosion" in Tick-Borne, WEF-Touted Alpha-Gal Syndrome.
• Rioters clash with police in Belfast as unrest continues amid outrage over the attempted beheading of a man.
• *IRAN SAYS IT WILL HIT NEW US TARGETS, TASNIM REPORTS.       
• Solar Tops Coal In US Power Mix For The First Month Ever.
• Stop Destroying Civilization!.
• Soft CPI, Soaring SOXS, & Cease-Ceasefire Trigger More Market Turmoil; Bullion Battered.   

• @CNBC

• CNBC Daily Open: Trump expresses 'love' for inflation print and anger at Iran. 
• Thursday's big stock stories: What’s likely to move the market in the next trading session.
• Oil jumps as U.S. fresh strikes on Iran raise worries of extended disruption to energy flows. 
• Stock futures slip after U.S. launches additional strikes against Iran, oil rises: Live updates.
• Oracle beats on earnings and revenue, adds $20 billion to planned capital raise.
• Inflation accelerated in May as rising energy costs contributed to pain for consumers, though underlying pressures were less intense. The consumer price index, a broad gauge of goods and services costs across the U.S. economy, rose at a seasonally adjusted 0.5% for the month, putting the annual inflation rate at 4.2%, the Bureau of Labor Statistics reported Wednesday. Both numbers were in line with the Dow Jones consensus though the monthly number was 0.1 percentage point below the April reading. (graph) 

• @TheTranscript

• $ORCL CFO: Oracle expects to raise ~$40B in FY27 debt & equity to fund AI infrastructure buildout "To support our capital investments program, we expect to raise around $40B in debt & equity in our FY 27, that includes our already announced $20B at-the-market equity issuance. We don't anticipate raising additional debt funding in calendar year 2026"
• $ORCL CFO: CapEx acceleration is driven by deployment timing rather than inflation in hardware component costs. 
• $ORCL Oracle CFO Hilary Maxson: ""In terms of Q4, it was a record quarter, driven by strengths in both our cloud infrastructure and cloud apps business. Revenue was $19.2 billion, up 21% in US dollars. Cloud infrastructure revenue grew 93%, reflecting strong demand for both AI workloads and our database services, and cloud apps was up double-digit at plus 10%."  
• $ORCL: "Remaining Performance Obligations, or RPO, ended the quarter at $638B, up 363% YoY and up $85B sequentially from the end of Q3....The large increases in Oracle’s RPO and revenue are driven by the growing demand for cloud infrastructure for AI training and inferencing." 
• Oracle double beat: Commentary: "Total quarterly revenues increased 21% to $19.2 billion, reflecting broad-based demand for Oracle's industry-leading cloud technology and applications suites" $ORCL: -2% AH.

Night Trading 

• Asian equity indices are -1.5% to -.5% on average. 
• Asia Ex-Japan Investment Grade CDS Index 73.75 +.75 basis point. 
• China Sovereign CDS 40.25 unch.
• China Iron Ore Spot 101.35 USD/Metric Tonne -.11%. 
• Crude Oil 91.64/bbl. +1.8% 
• Gold 4,094.10 USD/t oz. -1.0%. 
• Swiss Franc/Offshore Chinese Renminbi Cross 8.49 +.1%.
• Bloomberg Emerging Markets Currency Index 35.03 -.04%.
• Bloomberg Global Risk-On/Risk Off Index 118.7 -.2%.
• US 10-Year Yield 4.55% unch.
• Japan 30-Year Yield 3.89% +2.0 basis points. 
• Volatility Index(VIX) futures 22.1 +3.0%.
• Euro Stoxx 50 futures -.98%. 
• S&P 500 futures -.01%.
• NASDAQ 100 futures +.01%.

Morning Preview Links

BOTTOM LINE: Asian indices are mostly lower, weighed down by technology and industrial shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower.  The Portfolio is 25% net long heading into the day.