August 3rd Pre-Market Brief

Good Morning

New month, similar themes. Trump called off strikes and oil gave back some of the war premium. Iran's foreign ministry says no talks are scheduled.

The Dow is up almost 700 and the Nasdaq is barely awake, so pick your headline.  A lot to look forward for this month.

Let's dig in...

Today's Big Picture

1. The Deal Doesn't Reopen The Strait
Trump called off the strikes and said talks start this afternoon. Brent came down near 83 dollars and the 10-year yield fell to about 4.67. But Iran is negotiating with Oman, not Washington, and its own spokesman said the new shipping route is a separate question from whether the strait reopens. Nine ships transited Sunday, seven on a route Iran approved, and Tehran still hasn't dropped its demand to collect tolls.

2. Washington Never Spent A Dollar
The U.S. joined Japan in buying yen for the first time since 1998 and reportedly sold euros to do it. The bigger help was pointing Tokyo to a Fed facility that lets it raise dollars against its Treasuries instead of selling them. Japan is the largest foreign owner of U.S. government debt, and keeping it out of the seller's chair was the point. The yen came off 164 to about 157 and is already drifting back.

3. Two Companies Are Half The Earnings Story
Bank of America says second quarter profits for the S&P 500 are tracking 45 percent growth from a year ago. Take out the rising value of investments Alphabet and Amazon hold and it's 27 percent. Both numbers are good, and 77 percent of companies have beaten, the best rate since 2021. The figure being quoted everywhere leans on two companies' paper gains, and paper gains don't repeat.

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Stock Spotlight (pre-market)

Bristol Myers Squibb $BMY ( ▲ 0.69% )  
Higher on a Financial Times report of merger talks with AstraZeneca that would value the pair near 400 billion dollars. Bristol Myers is losing Eliquis and Opdivo to generics and needs a pipeline, which is why it gets the pop and AstraZeneca gets sold.

Alibaba $BABA ( ▲ 5.1% )  
Higher after unveiling Qwen3.8-Max, a 2.4 trillion parameter model shipping next week. Company benchmarks put it second on one vision leaderboard and fifth on text.

Marriott International $MAR ( ▼ 0.71% )  
Reports before the bell and China is the line that matters. Hilton cut its China outlook last week and industry data has Chinese hotel room revenue falling from a year ago on both occupancy and rate.

eBay $EBAY ( ▼ 3.08% )  
Lower after Wells Fargo cut it to underweight on the Depop deal that closed last week. The bank sees weaker fiscal 2027 earnings and heavier marketing spend to defend the acquisition. eBay reports Wednesday, so management has two days to answer it.

Circle Internet Group $CRCL ( ▼ 2.54% )  
Lower after Morgan Stanley moved it to underweight, citing less of its dollar-linked stablecoin in circulation by 2027. Circle earns interest on the reserves backing those coins, so a smaller float is a smaller revenue base.

What to Watch

Upcoming IPO’s?
MarketBeat did an excellent job on this free IPO guide on IPO’s happening this year.

The Yen Shorts Have To Move
Speculators are holding roughly 12.5 billion dollars in bets against the yen, the most in two years. Barclays says a further climb forces them to buy it back, which pushes the yen higher on its own. Traders are pricing a Bank of Japan hike in October and some think sooner.

Two Nights Test The AI Bid
Palantir reports tonight and AMD follows Tuesday with data center revenue expected to roughly double to 6.5 billion dollars. AMD's new Helios rack is its first direct answer to Nvidia at the system level. SpaceX also posts its first quarter as a public company with the stock near an all time low.

Refiners Sold The War Back
Exxon, Chevron and Valero posted their best quarters in years off crude volatility, and refiner ETFs were among the biggest six-month winners. Diamondback Energy $FANG ( ▼ 1.92% )  reports tonight, the first producer to speak with crude near 80 dollars. If Hormuz actually opens, the summer's best trade unwinds here first.

- John

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