April 17th Pre-Market

Good Morning

Iran just declared the Strait of Hormuz fully open and oil is down almost 10% as I type this. Dow futures added 500 points in an hour. Weekend talks just got a lot easier.

Netflix is the only red thing on the tape and it's not contagious.

Let's dig in…

Today's Big Picture

1. Hormuz Opens. Oil Capitulates.

Iran's Foreign Minister just declared the Strait "completely open" in line with the Lebanon ceasefire. Brent down 9, WTI with an 82 handle. This is the biggest supply crisis of a generation unwinding in real time. The equity rally finally has a fundamental reason to exist.

2. Netflix Didn't Miss. The Setup Did. 

Netflix guided Q2 to 78 cents vs the 84 cent consensus and Reed Hastings is leaving the board after 29 years. Stock down 10 in the premarket. The market has been pricing Mag 7 beats as automatic. Tesla's Wednesday print just went from formality to real event.

3. Narrow Is Getting Wider. Slowly. 

Intel up 66%, Sandisk up 61%, Micron up 42% since the March 30 bottom. Hardware was left for dead six weeks ago and it just joined the party. But nine non-tech sectors are still dead weight. Broadening within tech isn't the same as broadening across the market.

Market Overview

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Stock Spotlight (pre-market)

Oracle $ORCL ( ▲ 5.02% )  
Sixth green day in a row, tracking its best week since 1999 with the software ETF up 14 on the week. Managers who trimmed software in the March selloff are now being forced to chase back in at higher prices.

Uber $UBER ( ▼ 1.04% )  
Buying another 4.5% stake in Delivery Hero from Prosus for 270 million euros, priced below last night's close. Prosus was forced by EU competition rules to sell, which tells me more European delivery divestitures are queued up. DoorDash and Deliveroo are now either buyers or targets, there's no middle ground.

Affirm $AFRM ( ▲ 1.11% )  
Morgan Stanley named it a Top Pick this morning with a $76 price target, citing earnings upside and easing private credit fears.

Alcoa $AA ( ▲ 0.04% )  
Missed both lines and pointed to the Iran war forcing a reroute of Middle East refining capacity. First clean corporate read on real operating damage from the conflict. Every industrial analyst now has to re-cut their Iran exposure models.

Intel $INTC ( ▲ 5.48% )  
Up 66% since the March 30 bottom, leading the hardware rotation alongside Micron and Sandisk. When beaten-up semis run this hard, underweight managers are forced back in at highs. Not a chase here, but the cleanest visual of the broadening thesis.

What to Watch

Weekend Talks (Saturday) 
Iran already opened Hormuz. The talks this weekend are about signing the paperwork, not cutting the deal. If it falls apart, oil rips back above 100 and Monday opens ugly. If it holds, we gap up.

Waller Speaks Today 
The most hawkish voice on the Fed. Nobody expects a rate cut this year, the war killed that. If Waller sounds even a little softer today, short-term bond yields drop and regional banks finally get bought.

Tesla Kicks Off Big Tech Earnings (Wednesday) 
First of the big names to report. Tesla just posted nine engineering jobs in Taiwan to build out its own AI chip factory. That's the real story, not the car numbers. Sets the tone for Microsoft, Google, and Meta next week.

Warsh Testimony (Tuesday) 
Trump's pick to run the Fed goes before Congress. Anything he says about rates moves the bond market. This is where the market starts betting on who replaces Powell.

- John

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