April 10th Market Overview

Happy Friday

Prices rose at the fastest pace since 2022 this morning and the market barely flinched. That's the story. Investors have already moved past the war and are betting on a peace deal that doesn't exist yet. Oil futures fell 10% this week but physical crude is still changing hands above $130.

Goldman says this week's rally was 2.7-to-1 short covering versus actual buying. The real test comes tomorrow in Islamabad where real negotiations on ending the war are supposed to take place.

Let’s dig in...

Today's Big Picture

Gas Prices Wreck the Inflation Print, and Americans Feel It 

March CPI hit 3.3% annual and 0.9% monthly, the biggest monthly gain since 2022. Gasoline accounted for nearly three quarters of that increase. Strip out food and energy and core prices actually came in below expectations at 0.2% monthly. Consumer sentiment hit the worst reading in the University of Michigan survey's 70-year history, and one-year inflation expectations jumped a full point to 4.8%. The Fed will look through this as long as oil cools off by summer. If it doesn't, they have a real problem.

Software Is Getting Destroyed While Semis Hit Records 

The iShares Software ETF hit its lowest level since November 2023. ServiceNow $NOW dropped 8%, Cloudflare $NET lost 11%, Salesforce $CRM keeps making new lows. Every new AI model release sends another wave of selling through traditional software names. Semis are printing all-time highs in back-to-back sessions at the same time. I don't think the market has ever made a sector rotation call this loudly.

Oil Posts Its Biggest Weekly Drop Since 2020, but Something Doesn't Add Up

Brent and WTI both fell over 10% this week on ceasefire optimism. Futures say the worst is over. Physical markets disagree. North Sea dated crude traded above $132 a barrel Thursday while Brent futures sat below $97. That gap is enormous and one side is wrong. Weekend talks in Islamabad will decide which.

Market Overview

Index Performance

Stock Spotlight

Lumentum $LITE ( ▲ 0.24% )  
CEO told Bloomberg the company could be sold out through 2028 within two quarters. Althea Capital raised their price target from $500 to $1,225 and called it the fastest-growing AI supply chain name.

Taiwan Semiconductor $TSM ( ▲ 1.79% )  
posted record Q1 revenue of $35.6 billion, up 35% from a year ago. March alone topped $13 billion for the first time in company history.

CoreWeave $CRWV ( ▲ 12.19% )  
announced deals with both Meta $META and Anthropic on the same day. The Meta deal alone is $21 billion through 2032 using Nvidia's Vera Rubin chips.

Organon $OGN ( ▲ 28.65% )  
rallied hard on reports that India's Sun Pharmaceutical submitted a binding buyout offer.

Big Name Updates

Palantir $PLTR ( ▼ 2.07% )  
fell again, now down nearly 28% on the year. Trump tried to prop it up with a Truth Social post praising its military capabilities but the stock couldn't hold. Michael Burry is short the name.

Amazon $AMZN ( ▲ 1.87% )  
is up just 3% this year. Needham says the problem is $200 billion in planned capex with 30% going to non-AI businesses that AI itself might disrupt.

Nike $NKE ( ▼ 3.22% )  
got downgraded by Piper Sandler to neutral with a $50 target. Still not cheap at 22x forward earnings and no catalyst until Investor Day in the back half.

Other Notable Company News

ServiceNow $NOW ( ▼ 8.18% )  
downgraded by UBS to neutral with a target cut from $170 to $100.

Shake Shack $SHAK ( ▲ 1.25% )  
upgraded to outperform by Mizuho with a $120 target. World Cup traffic and a new loyalty program should help comps.

Replimune $RGEN ( ▲ 0.38% )  
dropped after the FDA rejected its melanoma drug for the second time. Stock is down over 50% this year.

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Sector Watch

Bond Market

Ten-year yield ticked up to 4.32% after the CPI print but barely moved. Bond traders treated this as old news. Rate cuts are off the table for the foreseeable future with multiple Fed officials saying they could go most of 2026 without touching rates.

Policy Watch

Fed 
Powell will treat this energy spike as a supply shock and look past it. But he's said publicly he's worried about something bigger: four major supply disruptions in six years risk training consumers to expect higher prices permanently. Core inflation was tame this month. If it stays that way, the Fed sits tight. If energy costs start bleeding into everything else by summer, the conversation changes.

Middle East

• VP Vance leads the US delegation to Islamabad tomorrow for talks with Iran

• The ceasefire is holding on paper but the Strait of Hormuz is still barely functional. Only 8 ships crossed Thursday versus the usual 135

• Saudi Arabia lost 600,000 barrels per day of production capacity from drone strikes on energy infrastructure

• Lebanon says it needs its own ceasefire before joining further talks. Netanyahu is still hitting Hezbollah targets

• No ship carrying jet fuel has passed through the Strait since it reopened. Spot jet fuel prices in the US are at $175 a barrel

Fiscal

• Tariff revenue fell to $22.15 billion in March, down 30% from last October's peak and the fifth straight monthly decline

• Budget deficit for the first half of fiscal 2026 is $1.17 trillion, down 11% from last year

• Kevin Warsh's Fed chair nomination hearing delayed. Senate still waiting on his paperwork

Other 

Treasury Secretary Bessent and Fed Chair Powell called in major bank CEOs to discuss cyber risks from Anthropic's new Mythos AI model. Separately, Anthropic is exploring designing its own chips. The White House also warned staff against using prediction markets to trade on inside policy information.

What to Watch

Islamabad Negotiations 
Most important event for markets this weekend. If Vance and Iranian officials make progress on reopening Hormuz for real, oil drops hard and stocks rally Monday. If talks fall apart, the physical cargo market is already telling you where prices go next.

Bank Earnings Goldman Sachs 
$GS kicks it off Monday. JPMorgan $JPM, Wells Fargo $WFC, Citigroup $C, and BlackRock $BLK report Tuesday. Morgan Stanley $MS on Wednesday. Trading desks probably crushed it given the volatility. I'm listening for how management talks about private credit risks after the A.M. Best report spooked insurance stocks today.

March PPI Tuesday 
Another inflation read that feeds into the PCE number the Fed actually cares about. Will show how much energy costs are hitting producers and manufacturers.

Mechanical Fund Flows 
Goldman models show trend-following funds are about to buy $34 billion in S&P 500 futures as they flip short positions to long. That's a real tailwind next week. But Goldman's own prime brokerage data shows this week's rally was mostly short covering, not new money coming in. Nobody is a believer yet.

Want to stay up-to-date on latest Nuclear stocks?

MarketBeat did an excellent job on this free Nuclear stock guide.

Thanks for reading - you are now the more informed 🙂

- John

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