April 1st Pre-Market

Good morning.

We are in day two of the Iran bounce and stocks are still pointing higher in pre-market. Spending and hiring numbers both came in strong this morning, which is good for the economy but but bad for interest rates.

Trump addresses the nation on Iran tonight at 9 PM ET. I think that speech matters more than anything else today. If he talks about actually reopening shipping lanes in the Middle East, this bounce likely continues this week.

Let’s dig in…

Today's Big Picture

1. Iran Threatened To Attack 18 U.S. Tech Companies Today
 
The IRGC named Nvidia, Apple, Microsoft, Tesla, Boeing, and 13 others as "legitimate targets" starting 12:30 PM ET. This isn't hypothetical posturing. Iranian strikes already hit Amazon Web Services data centers in the UAE earlier this month and caused real outages.

2. Stocks Are Pricing In Peace. Oil Is Not. 

Stocks are rallying everywhere on Trump's "two to three weeks" exit timeline. But Brent settled at $118 during yesterday's rally and the Strait of Hormuz is still closed. The war has already taken 12 million barrels per day off the market, more than the 1973 and 1979 oil crises combined. The IEA (International Energy Agency) says April's losses could be double what March saw. Until that strait reopens, the energy problem isn't going anywhere.

3. Consumer Is Spending

Two big economic reports dropped this morning and both came in stronger than expected. Retail sales showed people are still spending. Private hiring beat forecasts by a wide margin. That sounds like good news, but here's the problem: if the economy looks this healthy, the Fed has no reason to lower interest rates. Before the war, Wall Street expected two rate cuts this year. Now they expect zero. Borrowing costs are going up, not down. Mortgage rates just hit 6.57, the highest in seven months.

Market Overview

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Stock Spotlight (pre-market)

Nike $NKE ( ▲ 3.08% )  
beat on Q3 earnings and revenue but the guide is the story. Management expects revenue to decline this quarter and China to drop around 20% next quarter. Three Wall Street desks downgraded the stock before the open: JPMorgan, Bank of America, Goldman Sachs.

RH $RH ( ▲ 5.91% )  
missed badly. Q4 earnings came in at $1.53 versus the $2.22 consensus. Full-year revenue guide of 4 to 8 growth undercut the Street at 8.8. Tariffs and weather were the excuses. The stock is down in premarket.

nCino $NCNO ( ▲ 3.88% )  
guided Q1 revenue to $154.5-$156.4 million, above the $152.7 the Street had. Paired that with a $100 million accelerated buyback. Small name but the numbers were good and the tape is rewarding it.

Exxon Mobil $XOM ( ▼ 1.06% )  
is the other side of the Iran trade. If peace is real, energy unwinds. Brent is back near $100 and the whole group is leaking. ConocoPhillips $COP and Occidental $OXY are weaker than Exxon this morning.

Newmont $NEM ( ▲ 4.98% )  
is catching a bid as gold pushes back above $4,700. The dollar is down for a second straight session and that's doing the work. Worth noting: gold had its worst month since 2013 in March. This bounce says the market isn't all-in on the peace trade.

Walt Disney $DIS ( ▲ 2.18% )  
picked up an upgrade to outperform from Raymond James. The firm thinks macro headwinds have pushed the stock to a level worth buying.

What to Watch

Trump's Iran Speech (9 PM ET) 
Forget what he says about leaving. The thing to listen for is whether he has a plan to reopen the shipping lanes Iran shut down. If yes, oil prices drop and this bounce keeps going. If he dodges that question, energy costs stay high and nothing really changes.

ISM Manufacturing Report (10 AM ET) 
This tells us whether American factories are holding up under $100 oil. A weak number here would be the first real sign the economy is starting to crack.

Iran's Threat Deadline (12:30 PM ET)
Iran's military said attacks on U.S. tech companies in the Middle East would begin at this time. Could be bluster. Could be real. The AWS strikes earlier this month actually happened. Worth watching around midday.

Thanks for reading 🙂

- John

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