July 13th Pre-Market Brief

Good Morning

The US and Iran traded strikes all weekend and oil is up, but we have a full calendar that will aslo steer macro . Bank earnings, CPI, and Warsh all land tomorrow. Chips are red on top of it this AM, and SK Hynix just had its worst day ever in Seoul with nobody able to say why.

TSMC posted its best June ever this morning and got sold anyway.

My take is folks are trimming risk ahead of a loaded week.

Let's dig in...

Today's Big Picture

1. The Selloff Nobody Can Explain

SK Hynix had its worst day on record in Seoul, tripping the Kospi's circuit breaker and dragging Samsung with it. No trigger, no news, just a morning where TSMC beat its own high-end guidance and said it's sold out on 3 nanometer. Samsung backed up that read by moving its Yongin fab timeline up a year to 2029, on the same day its own stock fell over 6%. The company closest to a memory glut is spending faster, not slower, which is what positioning looks like instead of a fundamentals problem.

2. Hormuz Is Getting Less Scary, Slowly

Both sides are still trading strikes and Brent sits near $78, no surprise there. What's not priced: Goldman counts seven pipeline projects that could route over 45% of prewar Gulf exports around the strait by next year, and over 60% by 2028. The chokepoint is on a timer. Gold fell anyway, and Standard Chartered has the cleaner explanation: real yields are near their highest since 2008 and the Fed looks on hold through 2026, which is what's crushing gold's appeal, not confidence in peace.

3. The AI Trade Is Arguing With Itself

Memory costs are running toward five times their 2024 level, and the pass-through has started, with Apple's top MacBook jumping to $1,999 from $1,699 and Xbox adding $100 next month. Economists put the buildout's hit to core inflation at roughly half a point by December, which builds the case for the hike that would crush the AI trade's multiple. Raymond James pushes back with a number of its own: AI mentions across all 11 S&P sectors are up 98% year over year, and it expects capex plans to get reaffirmed and rise through 2028 anyway.

Market Overview

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Stock Spotlight (pre-market)

Meta $META ( ▲ 5.98% )  

Moving on a $40 billion add to its Louisiana data center, taking announced spend to $50 billion and the whole site past a quarter trillion once chips are counted. Meta is not writing that check alone. Blue Owl owns most of the project and Entergy is building ten gas plants to feed it, so the people forced to act are private credit lenders and Louisiana ratepayers, not Zuckerberg.
(Unrelated:I found an entergy branded V1x on the golf course the other weekend)

Micron $MU ( ▼ 1.24% )  

Down with the whole memory group on no news of its own. LPL expects Micron and Nvidia to deliver roughly two fifths of all S&P 500 earnings growth this quarter.

CCC Intelligent Solutions $CCC ( ▲ 1.36% )  

Up after Bloomberg reported Elliott built a large stake, and built it before the company started sale talks. That puts CCC's board in a corner. Any buyer now has to clear a price Elliott is willing to accept.

Axalta $AXTA ( ▼ 0.12% )  

Dealing with a raid on its merger. Nippon Paint bid $8.6 billion for Akzo Nobel's decorative paints unit, which is a way to break up the Akzo and Axalta merger of equals without buying the whole company. Akzo's board is still backing Axalta, so Akzo shareholders are the ones who have to choose.

Valero $VLO ( ▼ 0.2% )  

Up with energy, but crude is the boring half of the story. Argus says Russia has pulled diesel off the export market, and that shows up in refining margins first. Diesel buyers in Europe are the ones scrambling.

MGM Resorts $MGM ( ▲ 0.95% )  

Higher on a Journal report of private talks with Barry Diller. His People Inc made an offer back in early June that MGM never publicly answered.

What to Watch

IPO’s

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

CPI Hits Tuesday, 8:30 AM ET
Traders price about a one in three chance of a hike this month. Goldman puts it closer to one in four before next summer.

Warsh Testifies Tuesday, 10:00 AM ET
He skipped the June rate projections, shortened the statement, and still won't signal a path. JPMorgan's Michael Feroli says that risks Warsh ceding Fed communication to the rest of the board. Listen for how he'd react to a hot CPI number, not whether he predicts one.

Big Banks Open Earnings Tuesday
JPMorgan, Goldman, Bank of America, Wells Fargo, and Citigroup report before the bell. The SpaceX listing already handed the group a $500 million underwriting payday, so the beat itself is close to priced in. HSBC's Saul Martinez says even a clean quarter may not move estimates higher, which puts the real signal in the guide.

- John

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