Thursday Watch

Around X:

• @Business  

• American forces carried out airstrikes on an Iranian military site, underscoring the elusiveness of any resolution to the war that began nearly three months ago, despite recent optimism.
• Chinese imports of crude oil are set to drop to levels not seen since the pandemic, as the war in Iran reveals the extent to which demand has disappeared and may not be coming back.
• Federal Reserve Vice Chair Philip Jefferson said he expects inflation to cool later this year as the effects of tariffs and higher energy costs wear off, though he warned inflationary risks remain tilted to the upside.
• Get up to speed on what's moving global markets.
• Here’s what you need to know to start your day.    

• @ZeroHedge

• The Trump Administration Is in Talks to Fund U.S. Drone Companies: WSJ. 
• Iranian military source told Tasnim News Agency: "A few hours ago, an American tanker was about to pass through the Strait of Hormuz by turning off its radar system, but was forced to stop and return after the IRGC Navy took swift and decisive action and fired at it while US army fired at Bandar Abbas but did not cause any casualties or property damage".
• Texas AG Sues Discord For Deceiving Parents, Endangering Children.
• US Conducts New Strikes In Iran Around Hormuz Strait After Drone Intercepts.
• Viruses For Dummies.
• Inside The FDA's "Cover-Up" Of Child Deaths Linked To Covid Vaccines.
• UBS Answers The 10 Toughest Clients Questions: Part 1.
• US, India Sign Critical Minerals And Rare Earths Mining Pact.
• China's Crackdown On Online Foreign Trades Will Increase Capital Flight.
• Why Is Consumer Sentiment At Record Lows?
• Shanghai, Straits, Semis, & Selling: Black Gold, Big-Tech, & Bonds Bifurcate.         

• @TheTranscript 

• Agilent CEO: "It was an excellent second quarter..." $A: +11% AH.
• Marvell CEO: "We are seeing exceptional AI-related bookings, and as a result, we are significantly raising Marvell’s revenue outlook for both fiscal 2027 and fiscal 2028 compared with the guidance we provided last quarter." $MRVL: +6% AH.
• $SNOW CEO: "Snowflake delivered a milestone quarter, with product revenue of $1.33 billion, up 34% year-over-year, marking the strongest sequential dollar growth in our history...We are seeing strong momentum from both AI-driven acceleration of our core platform and growing adoption of our first-party AI products, positioning Snowflake to lead in this new era.".
• Snowflake double beat. —Expands AWS collaboration with a $6B commitment. —To acquire Natoma to strengthen secure connectivity for AI agents. CEO: "AI continues to be a powerful tailwind for Snowflake, and Q1 marks a clear inflection point in that journey.".
• $SNOW: +33% AH.

• @WallStEngine

• Texas Stock Exchange is targeting July 6, 2026, to begin continuous trading. S&P Dow Jones Indices will also add the Texas Stock Exchange as an eligible exchange for S&P U.S. indices. 
• $NBIS is hitting all-time highs in extended hours after Leopold disclosed a 5.6% stake in the company.  
• $DELL won a five-year ~$9.7B Pentagon software agreement to provide Microsoft enterprise software across the U.S. military. The deal covers Microsoft 365, cloud subscriptions, and on-prem licensing through a single contract vehicle. Pentagon officials expect the consolidation to cut duplicate software spending and save about $422M annually. 

Night Trading 

• Asian equity indices are -.75% to +.25% on average. 
• Asia Ex-Japan Investment Grade CDS Index 71.75 -.5 basis point. 
• China Sovereign CDS 39.75 +.25 basis point.
• China Iron Ore Spot 104.6 USD/Metric Tonne -.6%. 
• Crude Oil 90.20/bbl. +1.7% 
• Gold 4,437.9 USD/t oz. -1.0%. 
• Swiss Franc/Offshore Chinese Renminbi Cross 8.60 -.13%.
• Bloomberg Emerging Markets Currency Index 35.28 -.07%.
• Bloomberg Global Risk-On/Risk Off Index 123.9 +.1%.
• US 10-Year Yield 4.50% +2.0 basis points.
• Japan 30-Year Yield 3.93% -1.0 basis point. 
• Volatility Index(VIX) futures 18.5 +.6%.
• Euro Stoxx 50 futures -.38%. 
• S&P 500 futures +.08%.
• NASDAQ 100 futures +.01%.

Morning Preview Links

BOTTOM LINE: Asian indices are mostly lower, weighed down by consumer and metals & mining 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 Finish Slightly Higher on Mideast War Resolution Hopes, Earnings Outlook Optimism, Falling Inflation Expectations, Consumer Discretionary/Transport Sector Strength

Economic/Market Gauges:

• North American Investment Grade CDS Index 51.6 -.3%
• BofA Private Credit Proxy Index 72.0 +.5% 
• Bloomberg US Securitized MBS/ABS/CMBS Avg. OAS .24 -1.0 basis point
• BofA Global Financial Stress Indicator -.27 -5.0 basis points
• European Financial Sector CDS Index 56.5 -.3%
• Emerging Market CDS Index 154.8 -.8%
• Israel Sovereign CDS 56.1 -2.8% 
• Bloomberg Global Trade Policy Uncertainty Index .7 unch.
• US Morning Consult Daily Consume Sentiment Index 88.0 +.8

• Citi US Economic Surprise Index 44.8 +1.1

• Citi Eurozone Economic Surprise Index -73.4 +.3

• Citi Emerging Markets Economic Surprise Index 33.1 -.7
• S&P 500 Current Quarter EPS Growth Rate YoY(473 of 500 reporting) +27.5% unch.
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 359.25 +.42:  Growth Rate +22.4% +.1 percentage point, P/E 20.9 unch.
• S&P 500 Current Year Estimated Profit Margin 15.45% +1.0 basis point
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(9 of 10 reporting) +67.2% unch.
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 880.10 +3.10: Growth Rate +122.3% +.8 percentage point, P/E 20.2 +.1 
• Bloomberg US Financial Conditions Index 1.05 +3.0 basis points
• US Yield Curve 44.5 basis points (2s/10s) unch.
• Bloomberg Industrial Metal Index 184.3 -.8%
• Dutch TTF Nat Gas(European benchmark) 46.1 euros/megawatt-hour -2.1%
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 14.5% +1.7 percentage points
• US Atlanta Fed GDPNow Q2 Forecast +4.3% unch.
• US 10-Year T-Note Yield 4.48% -1.0 basis point
• 1-Year TIPS Spread 2.63 -4.0 basis points

• Highest target rate probability for July 29th FOMC meeting: 90.6% (+2.5 percentage points) chance of 3.5%-3.75%. Highest target rate probability for Sept. 16th meeting: 73.4%(+1.9 percentage points) chance of 3.5%-3.75%. (current target rate is 3.5-3.75%)
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +230 open in Japan 
• China A50 Futures: Indicating -24 open in China

• DAX Futures: Indicating +80 open in Germany

Portfolio:

• Slightly Higher: On gains in my biotech/consumer discretionary/tech sector longs
• Disclosed Trades: None
• Market Exposure: 100% Net Long

Bull Radar

Style Outperformer:

• Large-Cap Growth +.2%

Sector Outperformers:

• 1) Gambling +3.9% 2) Computer Services +2.2% 3) Construction +2.0%

Stocks Rising on Unusual Volume:

• QFIN, DY, ADTN, ANF, MANU, BHVN, LUNR, IREN, SHLS, APP, BBWI, CLFD, AMWD, PENN, BMA, MGM, VNET, CORT, TEO, SG, RCAT, BEAM, CLF, LPTH, CIFR, COHU, ENPH, NTLA, APLD, ZVRA, NVAX, SEZL, CELH, JHX, CSTL, RDDT, BLLN, CSTL, UAL, SPIR, YPF, GGAL, BBAR, GOOS, RDW, UMAC, UMC, FWRD, ZGN, VIK, GH, WULF, SHAK, VICR, GXO, CARG, GRPN, BWA, LUMN, AEVA, ECL, GRPN, SQM, CHA, CLSK, CEPT, SNX, HLT, VSAT, LULU, CLYM, LOMA, CAE, AMR, META, F, VPG, CRESY, GAP, ICLR, MITK, BTDR and MXL

Stocks With Unusual Call Option Activity:

• 1) APPS 2) CRSR 3) ADTN 4) DEFT 5) HPP 

Stocks With Most Positive News Mentions:

• 1) DY 2) ANF 3) MOV 4) APP 5) MGM 

Sector ETFs With Most Positive Money Flow:

• 1) SOXX 2) DRAM 3) IGV 4) XLI 5) XLF

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:

• (ATHM)/1.55
• (BBY)/1.23
• (BURL)/1.80
• (CM)/1.79
• (DLTR)/1.54
• (HRL)/.35
• (KSS)/-.19
• (PLAB)/.53
• (RY)/2.77
• (TD)/1.65
• (WB)/.36 

After the Close: 

• (AMBA)/.10
• (AEO)/.12
• (ADSK)/2.84
• (COST)/4.98
• (DELL)/2.96
• (GAP)/.37
• (HQY)/1.11
• (MDB)/1.19
• (NTAP)/2.27
• (OKTA)/.85
• (PD)/.25 

Economic Releases 

8:30 am EST

• Personal Income for April is estimated to rise +.4% versus a +.6% gain in March.
• Personal Spending for April is estimated to rise +.5% versus a +.9% gain in March.  
• The Core PCE Price Index MoM for April is estimated to rise +.3% versus a +.3% gain in March. 
• Initial Jobless Claims for last week is estimated to rise to 211K versus 209K the prior week.
• Continuing Claims is estimated to rise to 1783K versus 1782K prior.
• Durable Goods Orders for April is estimated to rise +4.0% versus a +.8% gain in March.
• Durables Ex Transports for April is estimated to rise +.5% versus a +.9% gain in March.
• Cap Goods Orders Non-Defense Ex-Air for April is estimated to rise +.4% versus a +3.4% gain in March.
• 1Q GDP revisions. 

10:00 am EST

• New Home Sales for April is estimated to fall to 660K versus 682K in March. 

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -3,620,200 barrels versus a -7,863,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -2,237,400 barrels versus a -1,548,000 barrel decline the prior week. Distillate inventories are estimated to fall by -1,374,000 barrels versus a +372,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to rise by +.83% versus a -.1% decline prior.  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Barkin speaking, 7Y T-Note auction, Atlanta Fed GDPNow Q2 update, weekly EIA natural gas inventory report, Fed's weekly balance sheet report, American Society of Clinical Oncology Meeting, Jefferies Software/Internet/AI Conference, BofA Power/Utilities/CleanTech Conference, KeyBanc Industrials/Basic Materials Conference, (ONON) annual meeting, (MOS) annual meeting, (RBLX) annual meeting, (DDS) annual meeting, (H) investor day, (RCL) annual meeting, (FTAI) annual meeting, (FFIV) investor meeting, (DG) annual meeting,  and the TD Cowen Tech/Media/Telecom Conference 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 -.01% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 13.1 -1.7
• 7 Sectors Rising, 4 Sectors Declining
• 56.4% of Issues Advancing, 41.5% Declining 
• TRIN/Arms .92 -40.3%
• Non-Block Money Flow +$109.8M
  
• 123 New 52-Week Highs, 32 New Lows
• 55.4% (+.9%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 59.8 +3.8

Polymarket: 

• Will China invade Taiwan by end of 2026? 7.0% unch.
• Trump announces US blockade of Hormuz lifted by June 30th 68.0% +1.0 percentage point
• US x Iran permanent peace deal by June 30th 47.0% -7.0 percentage points 
• US announces new Iran agreement/ceasefire extension by June 30th 70.0% -5.0 percentage points
• US Invades Iran before 2027 19.0% unch.

Other:

• Bloomberg Global Risk-On/Risk-Off Index 123. -.6%
• Global Monitor Iran Instability Index 78.0 -22.0
• Strait of Hormuz Oil Tanker Traffic Curtailed Estimate 84.0% -13.0 percentage points
• US High-Yield Tech Sector OAS Index 442.5 -1.25 basis points
• Bloomberg Cyclicals/Defensives Index 259.3 +.2%
• Morgan Stanley Growth vs Value Index 156.0 -.06%
• CNN Fear & Greed Index 61.0 (GREED) +1.0
• 1-Day Vix 9.50 -14.8%
• Vix 16.7 -2.0%
  
• Total Put/Call .73 -7.6%

Wednesday Watch

Around X:

• @Business  

• Another tanker carrying liquefied natural gas from Abu Dhabi National Oil Co. has exited the Strait of Hormuz, adding to a recent uptick in energy flows through the vital waterway.
• SK Hynix has surged past a $1 trillion market valuation after its shares soared more than 900% in the past year, reflecting investor confidence in its position as the leading supplier of advanced memory chips powering AI. 
• SQM reported a sharp increase in first-quarter profit and raised its lithium sales forecast, betting that robust demand from battery storage systems will keep the market tightly supplied.
• Former President Joe Biden is suing the US Justice Department to block officials from sharing audio recordings and transcripts of interviews he gave for a memoir project with a conservative advocacy group and Republicans in Congress.
• Fireworks AI in Talks for Funding at $15 Billion Valuation.
• President Donald Trump backed the CFTC as the sole regulator of prediction markets, siding with the agency amid a growing legal fight with states over the multibillion-dollar industry.
• Get up to speed on what's moving global markets.
• Here’s what you need to know to start your day.      

• @ZeroHedge

• Texas U.S. Senate Republican Primary Tarrant County Early Vote: Ken Paxton – 36,977 (58.9%). John Cornyn (Inc.) – 25,808 (41.1%). This vote was Cornyn +10 in the first round, so this is a 28 point shift toward Paxton. 
• As of a couple of weeks ago, no US Senator had lost reelection in a primary since 2012. Now GOP voters have ousted two senators over 10 days: Cassidy in Louisiana, and Cornyn in Texas. 
• Goldman raises year end S&P price target from 7600 to 8000 driven entirely by AI capex. 
• "Semis are now up +14% over 5-days; this equates to 16.5% of performance above NVDA over these 5 days, matching the largest SOX v NVDA 5-day spread since 2018" - Goldman. 
• Second Chinese 'Combat' Patrol Buzzes Taiwan Within Days, On Heels Of Xi-Trump Summit. 
• Oklo Lands DOE Plutonium Deal To Turn Surplus Material Into Bridge Fuel. 
• Al Green known for interrupting Trump’s state of the union speech has lost his primary in Texas 18th district. 
• 'Giant Turd': Progressive Dems Continue To Rage At DNC 2024 Autopsy.
• Condo Prices Already Dropped By Up To 33% In 24 Bigger Markets.
• NEW: A top homeland security official has directed ICE attorneys to aggressively pursue administrative fraud cases against immigration lawyers accused of filing false asylum claims. @CBSNews exclusively obtained the DHS memo directing the new ramp up.
• Homeowners Face Eminent Domain Bulldozers As Data Centers Demand Ever More Power.
• Showcase Of Socialism: New York, Europe, And The Rise Of The New Left.  
• Hasan Piker Says Quiet Part Out Loud, Maps Radical Left NGO Network To China-Based Marxist Financier.
• Iraq's Oil Collapse Sparks Race For New Export Routes.
• *TRUMP: WILL BE POSTPONING THE CABINET TRIP TO CAMP DAVID. *TRUMP: WE WILL BE HAVING OUR CABINET MEETING IN THE WHITE HOUSE.
• U.S. RACES TO SET UP QUARANTINE FACILITY IN KENYA FOR AMERICANS EXPOSED TO EBOLA: WSJ.
• Defending The Fourth Amendment To Protect Gun Owners.
• Tech sector ETFs have taken in $23b while every other sector has basically gotten nothing since Feb, nice chart from @Todd_Sohn. 
• "Something's Got To Give": Goldman Warns As Hormuz Hopes & Soaring Semis Lifts Bonds & Stocks (Again).      

• @CNBC

• Asia markets set for mixed open as investors continue to weigh fragile U.S.-Iran ceasefire.
• Wednesday's big stock stories: What’s likely to move the market in the next trading session.
• Stock futures are little changed after the S&P 500 closes at another record: Live updates.
• Stocks making the biggest moves after hours: Zscaler, Insulet, Box and more.   

• @TheTranscript  

• Zscaler double beat but disappoints on guide. CEO: "We delivered strong Q3 fiscal 2026 results with record profitability. ARR grew 25%, or 21%..." $ZS: -17% AH.

Night Trading 

• Asian equity indices are +.25% to +1.25% on average. 
• Asia Ex-Japan Investment Grade CDS Index 72.25 -.75 basis point. 
• China Sovereign CDS 39.5 +.25 basis point.
• China Iron Ore Spot 104.9 USD/Metric Tonne -.2%. 
• Crude Oil 92.90/bbl. -1.1% 
• Gold 4,530.4 USD/t oz. +.1%. 
• Swiss Franc/Offshore Chinese Renminbi Cross 8.64 -.02%.
• Bloomberg Emerging Markets Currency Index 35.28 -.03%.
• Bloomberg Global Risk-On/Risk Off Index 124.9 +.3%.
• US 10-Year Yield 4.48% -1.0 basis point.
• Japan 30-Year Yield 3.95% unch. 
• Volatility Index(VIX) futures 18.8 -.5%.
• Euro Stoxx 50 futures +.18%. 
• S&P 500 futures +.09%.
• NASDAQ 100 futures +.18%.

Morning Preview Links

BOTTOM LINE: Asian indices are mostly higher, boosted by technology and financial 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.