Wednesday Watch

Around X:

• @Business

• The US now expects oil supply disruptions stemming from the US-Israel war with Iran to reach about 600,000 barrels per day through the end of 2027.
• A federal judge in Boston entered a nationwide order blocking the US Postal Service from carrying out President Donald Trump’s directives to overhaul mail-in voting policies before the November midterm elections. 
• SpaceX, Northrop Grumman and other companies developing space-based missile interceptors for President Donald Trump’s $185 billion Golden Dome successfully completed their first key tests. 
• Investors are betting the $5 billion AI music startup Suno will be the next Spotify, but it risks being an early bust. 
• The Securities and Exchange Commission is considering taking direct control of a controversial database that tracks trades across US equities and options markets after Citadel Securities won a lawsuit challenging its funding last year
  .
• The former chief financial officer of a Miami Beach hedge fund admitted he embezzled more than $3 million over four years at the firm, approving phony invoices and using corporate credit cards for adult entertainment and personal travel. 
• Systematic buyers are getting ready to load up on stocks again after a massive unwind, according to Citadel. 
• Scarcity and profit margin. 
• Memory-chip makers may have found a new defense against the inevitable cooling of their boom: giving more cash back to shareholders. 
• Here’s the latest news and analysis on the oil market. 
• Here’s what you need to know to start your day. 

• @ZeroHedge

• Mysterious Drone Threat Emerges At America's "Unsinkable Aircraft Carrier," Prompting Curfews.
• Massachusetts Legalizes Abortion Up To Birth As Liberals Cheer. 
• Trump Weighs Call for Capital Gains Tax Cuts as Midterm Boost.
• Rep. Alexandria Ocasio-Cortez splits from fiancé Riley Roberts. 
• California Orders NGO Serving As "Financial Backbone" For Singham-Linked Marxism Causes To Cease Operations.
• China's Teapot Refiners Poised to Ramp Up Iranian Oil Buying.
• Hegseth Pushes $1.5 Trillion Military Budget As Tribute To Lindsey Graham.
• Phoebe Gates & Co-Founder Caught In The Cookie Jar: Slack Logs Contradict Phia's '24-Hour Bug' BS.
• Putin Pardons Ailing Former US Marine After Years In Russian Prison. 
• The Diamond Crash Accelerates. 
• *ORACLE HAS DRAWN UP PLANS FOR A NEW ROUND OF LAYOFFS: INSIDER. *NEW ORACLE LAYOFFS WOULD TAKE PLACE THIS MONTH: INSIDER.
• Mideast Malaise & AI Angst Batter Big-Tech & Bitcoin; Bonds Bid On Bad Data, Shrug Off Oil's Gains.             

• @CNBC  

• CNBC Daily Open: Big Tech wants to tap Wall Street's big wallets. 
• Wednesday's big stock stories: What’s likely to move the market in the next trading session. 
• Stocks making the biggest moves after hours: Super Micro Computer, CoreWeave, H&R Block and more.  
• Stock futures are little changed ahead of Wednesday's big inflation report: Live updates. 
• Wednesday's big stock stories: What’s likely to move the market in the next trading session. 

• @WallStEngine

• COREWEAVE $CRWV Outlook: Raises FY26 Guide: Revenue: $12.4B-$13.2B (Est. $12.63B). Adj. Oper Income: $960M-$1.15B (Est. $893M). CapEx: $35B-$39B (Est. $33.3B). Active Power: >1.85GW; from prior >1.7GW. Year-End Annualized Run-Rate Revenue: $18.5B-$19.5B. Managed Inference ARR: $250M+ exiting 2026. Q3 Guide: Revenue: $3.45B-$3.60B (Est. $3.43B). Adj. Oper Income: $200M-$260M (Est. $264M). CapEx: $11.5B-$13.5B. Interest Expense: $860M-$940M. Oper Margin: Expanding sequentially, reaching low teens in Q4. 
• $CAVA GROUP Q2’26 EARNINGS HIGHLIGHTS. Revenue: $365.4M (Est. $361M) ; +31.3% YoY. EPS: $0.19 (Est. $0.18). Same Restaurant Sales: 9.0%. Restaurant-Level Profit Margin: 25.7%; -60 bps YoY. Affirms FY26 Guide: Adj. EBITDA: $181.0M-$191.0M (Est. $188M). Same Restaurant Sales: 4.5% to 6.5%. Restaurant-Level Profit Margin: 23.7% to 24.3%. Net New Restaurant Openings: 75-77. Pre-opening Costs: $22.0M-$22.5M. 
• SUPERMICRO $SMCI Q4’26 EARNINGS HIGHLIGHTS. Revenue: $11.1B (Est. $11.55B). Adj. EPS: $1.70 (Est. $0.96) ; +315% YoY. Gross Margin: 17.5%; +800 bps YoY. FY27 Guide: Revenue: $65B-$72B (Est. $52.5B).  
• LUMENTUM $LITE Q4’26 EARNINGS HIGHLIGHTS. Revenue: $1.01B (Est. $988M). Adj. EPS: $3.23 (Est. $2.97) ; +267% YoY. Adj. EBITDA: $406.4M. Q1 Guide: Revenue: $1.23B-$1.28B (Est. $1.16B). Adj. EPS: $4.05-$4.35 (Est. $3.61). Non-GAAP Operating Margin: 39.5%-40.5%. 

• @MerengoFS 

• $CSCO Earnings Preview. 
• $COHR Earnings Preview.
• $NBIS Earnings Preview.  

Night Trading 

• Asian equity indices are -.50% to +.75% on average. 
• Asia Ex-Japan Investment Grade CDS Index 68.5 +.25 basis point. 
• China Sovereign CDS 37.0 -.25 basis point.
• China Iron Ore Spot 95.90 USD/Metric Tonne +.1%. 
• Crude Oil 83.90/bbl. +.9% 
• Gold 4,449.50 USD/t oz. +.16%. 
• Swiss Franc/Offshore Chinese Renminbi Cross 8.31 -.07%.
• Bloomberg Emerging Markets Currency Index 34.46 -.05%.
• Bloomberg Global Risk-On/Risk Off Index 127.5 +.3%.
• US 10-Year Yield 4.69% unch.
• Japan 30-Year Yield 3.99% +1.0 basis point.
• Volatility Index(VIX) futures 18.4 unch.
• Euro Stoxx 50 futures -.15%. 
• S&P 500 futures +.03%.
• NASDAQ 100 futures +.07%.

Morning Preview Links

BOTTOM LINE: Asian indices are mostly higher, boosted by energy and technology shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher.  The Portfolio is 75% net long heading into the day.

Stocks Reversing Lower into Final Hour on War-Induced Inflation Fears, Oil Rise, Technical Selling, Healthcare/Retail Sector Weakness

Economic/Market Gauges:

• North American Investment Grade CDS Index 51.6 -.3%
• BofA Private Credit Proxy Index 74.0 +.2% 
• Bloomberg US Securitized MBS/ABS/CMBS Avg. OAS .30 +2.0 basis points
• BofA Global Financial Stress Indicator -.20 -1.0 basis point
• European Financial Sector CDS Index 54.2 +.5%
• Emerging Market CDS Index 141.4 -.3%
• Israel Sovereign CDS 57.70 +3.8%
• Bloomberg Global Trade Policy Uncertainty Index .9 unch.
• US Morning Consult Daily Consume Sentiment Index 90.8 +1.8

• Citi US Economic Surprise Index 26.90 -.3

• Citi Eurozone Economic Surprise Index 68.4 +.2

• Citi Emerging Markets Economic Surprise Index 25.6 +1.8
• S&P 500 Current Quarter EPS Growth Rate YoY(446 of 500 reporting) +50.6% -.1 percentage point
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 388.48 +.34:  Growth Rate +32.1% +.2 percentage point, P/E 20.0 unch.
• S&P 500 Current Year Estimated Profit Margin 16.23% unch.
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(8 of 10 reporting) +138.4% unch.
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 944.42 +.39: Growth Rate +82.1% +.1 percentage point, P/E 19.7 -.3
• Bloomberg US Financial Conditions Index 1.33 unch.
• US Yield Curve 46.5 basis points (2s/10s) +.5 basis point
• Bloomberg Industrial Metal Index 181.1 +.4%
• Dutch TTF Nat Gas(European benchmark) 66.0 euros/megawatt-hour -1.3%
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 13.8% -.2 percentage point
• US Atlanta Fed GDPNow Q3 Forecast +5.8% unch.
• US 10-Year T-Note Yield 4.68% -2.0 basis points
• 1-Year TIPS Spread 1.73 -4.0 basis points

• Highest target rate probability for Oct. 28th FOMC meeting: 50.0% (-.9 percentage point) chance of 3.75%-4.0%. Highest target rate probability for Dec. 9th meeting: 44.5%(+1.9 percentage points) chance of 3.75%-4.0%. (current target rate is 3.5-3.75%)
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -110 open in Japan 
• China A50 Futures: Indicating -68 open in China
• KOSPI 200 Futures: Indicating +1 open in South Korea 

• DAX Futures: Indicating +90 open in Germany

Portfolio:

• Higher: On gains in my energy/financial/industrial sector longs, index hedges and emerging market shorts
• Disclosed Trades: Added to my (IWM)/(QQQ) hedges
• Market Exposure: Moved to 50% net long

Bear Radar

Style Underperformer:

• Large-Cap Growth -.3%

Sector Underperformers:

• 1) Shipping -1.7% 2) Healthcare Providers -1.3% 3) Social Media -1.3%

Stocks Falling on Unusual Volume: 

• ETON, LION, CRBG, LTC, EYPT, AAON, GSL, SLN, ADIG, HNRG, GRDN, VALE, HROW, YPF, CEPU, AHR, GGAL, JD, NGNE, NVRI, OFRM, APP, MAGN, DSP, BKD, AMTM, MIDD, QNST, MLTX, AS, APEI, VG, ACM, DFTX, FA, BCAX, OLMA, ETOR, TCMD, HUBG, ONON, LIF and CDNL

Stocks With Unusual Put Option Activity:

• 1) RXRX 2) HL 3) BW 4) BYND 5) ONON

Stocks With Most Negative News Mentions:

• 1) DJT 2) HUGB 3) BRCB 4) TNGX 5) BABA

Sector ETFs With Most Negative Money Flow:

• 1) SOXX 2) GRID 3) XBI 4) XLY 5) XLI

Charts:

• ETFs Falling on Unusual Volume
• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Small-Cap Value +.6%

Sector Outperformers:

• 1) Computer Hardware +3.9% 2) Gambling +2.6% 3) Energy +1.7%

Stocks Rising on Unusual Volume:

• QMCO, NIQ, ALMR, NN, SEPN, RPD, FENC, SE, ZLAB, CBLL, CODI, STDN, AEHR, ARMK, SEZL, CCB, CIFR, RDVT, KKR, CIB, RMAX, LB, P, AXON, APO, MELI, CRCL, BLTE, LEGN, CCXI, PLSE, TRUP, CTNM, ADAM, BX, BAM, ASIX, DCTH, KRNT, BEP, RAPP, CHYM, TTAN, AA and MTW

Stocks With Unusual Call Option Activity:

• 1) AL.LY 2) UMC 3) MAR 4) RITM 5) XME 

Stocks With Most Positive News Mentions:

• 1) NIQ 2) STIM 3) FRMI 4) ALMR 5) NN

Sector ETFs With Most Positive Money Flow:

• 1) XLE 2) XLK 3) XMH 4) LYTE 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:

• (EAT)/3.09
• (LQDA)/.76
• (NBIS)/-.72
• (PFGC)/1.60
• (TRMB)/.80 

After the Close: 

• (ANDG)/.09
• (CBRS)/-.17
• (CSCO)/1.17
• (COHR)/1.62
• (ENS)/2.83
• (JACK)/.88
• (PAAS)/.87
• (STAA)/.22
• (STUB)/.11 

Economic Releases 

8:30 am EST

• The CPI MoM for July is estimated to rise +.1% versus a -.4% decline in June.
• The Core CPI MoM for July is estimated to rise +.2% versus unch. in June.

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -967,750 barrels versus a +2,479,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -788,705 barrels versus a -1,643,000 barrel decline the prior week. Distillate inventories are estimated to fall by -1,896,250 barrels versus a -3,473,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to fall by -.29% versus a -.7% decline prior. 

2:00 pm EST

• Federal Budget Deficit for July is estimated at -309.0B versus -$291.1B in June. 

Upcoming Splits

• (BYND) 1-for-30

Other Potential Market Movers

• The 10Y T-Note auction, Real Avg. Weekly Earnings YoY for July, weekly MBA Mortgage Applications report, IEA monthly report, OPEC monthly report, Thomson Reuters IPSOS PCSI for Aug., Cleveland CPI MoM for July, WASDE report, Canaccord Genuity Growth Investors Conference, Mizuho Industrials/Chemicals Conference, JPMorgan Auto Conference, (SJM) annual meeting, (EQR) shareholder meeting and the Oppenheimer Tech 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 -12.7% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 14.5 +1.3
• 4 Sectors Rising, 7 Sectors Declining
• 58.8% of Issues Advancing, 38.7% Declining 
• TRIN/Arms 1.26 +75.0%
• Non-Block Money Flow +$31.7M
  
• 92 New 52-Week Highs, 53 New Lows
• 61.5% (+1.8%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 70.7 +1.4

Polymarket: 

• Will China invade Taiwan by June 30th 2027? 9.0% unch.
• Strait of Hormuz traffic returns to normal by August 31st 5.0% +1.0 percentage point
• Iran agrees to end enrichment of uranium by Sept. 30th 7.0% unch.
• Israel withdraws from Lebanon by August 31st 1.0% unch.
• US Invades Iran before 2027 18.0% +1.0 percentage point
• US announces end of Iranian blockade by August 31st 43.0% +9.0 percentage points

Other:

• Bloomberg Global Risk-On/Risk-Off Index 127.10 +.1%
• Global Monitor Iran Instability Index 74.0 +9.0
• Strait of Hormuz Oil Tanker Traffic Curtailed Estimate 91.0% unch.
• US High-Yield Tech Sector OAS Index 464.5 -1.5 basis points
• Bloomberg Cyclicals/Defensives Index 275.4 +.1%
• Morgan Stanley Growth vs Value Index 150.4 -.4%
• CNN Fear & Greed Index 62.0 (GREED) -3.0
• 1-Day Vix 8.9 -4.8%
• Vix 15.4% -.7%
• Total Put/Call .69 -19.8%