May 1st Pre-Market

Good Morning

April went out swinging. Apple beat, the S&P closed above 7,200 for the first time, and we just wrapped the best month since the pandemic recovery. The market got narrow fast, chips did basically all the work.

Oil's down this morning on news Iran responded to U.S. terms through Pakistani mediators, which is the quiet headline most people will miss today.

Let's dig in...

Today's Big Picture

1. April was a chip story, not a rally 

The S&P closed April up over 10 percent. The equal-weight version barely added 6. That gap matters because it tells you what carried the tape: chips, and basically only chips. Software is still down 20% on the year. Energy and healthcare finished April in the red. Semis ran 18% days in a row at one point. If they cool off in May, nothing else is set up to catch the ball yet.

2. Crude is cooling, but the refiner trade survives 

Oil is down this morning. Iran sent its response to U.S. peace terms through Pakistani mediators overnight, and the market is reading that as de-escalation. WTI is back to $103, Brent at $110. I'd be careful reading too much into that. The blockade is still legal under the ceasefire workaround, and UAE walks from OPEC today. Meanwhile diesel has nearly doubled while crude drifts. That spread is where the money is. $VLO and $MPC pocket it whether or not Iran signs anything.

3. This yen intervention isn't 2024 

Tokyo stepped in to prop the yen at 161 yesterday. It bounced to 156. Looks like a win, but BofA put out a note this morning explaining why it probably doesn't stick.

The Fed isn't cutting this time. Speculators aren't crowded short, so there's no squeeze. Takaichi's spending plans actively weaken the yen. And Japan needs to keep enough reserves to fund the $550 billion U.S. investment commitment they made last year. If the yen rolls back over, the carry trade unwind hits the S&P before it hits Tokyo.

Market Overview

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Stock Spotlight (pre-market)

Apple $AAPL ( ▲ 0.44% )  
Clean beat, strong guidance. iPhone missed for the second time in three quarters but Mac and services carried it. Anyone underweight the Magnificent Seven into May has to defend their book.

Roblox $RBLX ( ▼ 1.81% )  
Full-year bookings cut to $7.33 to $7.60 billion from $8.28 to $8.55 billion. Safety spend is eating the model. Long-onlys who rode this up are defending a guide that got cut by a billion dollars. Watch for capitulation.

Reddit $RDDT ( ▼ 0.35% )  
Beat on DAUs at 126.8 million, guided current-quarter EBITDA above the Street. Ad revenue compounding faster than models built. Ad-tech PMs who skipped Reddit at IPO have to chase it now.

Atlassian $TEAM ( ▼ 2.7% )  
and Twilio $TWLO Both raised annual guides overnight. Software ($IGV) still down 20 YTD while chips ran a record streak. Two raises in one morning is a setup, not a coincidence. $CRM and $NOW are the next dominoes.

Exxon $XOM ( ▼ 0.22% )  
Beat estimates despite Iran shipping snarls cutting net income 45 percent. BP, Shell, and Total made Q1 trading windfalls while U.S. drillers ate logistics costs. Long European majors, fade U.S. integrateds.

Estee Lauder $EL ( ▲ 1.35% )  
Beat hard at $0.91 EPS vs $0.65 expected, more job cuts coming. The turnaround is working. Staples PMs hiding in defensives have a name that beat the tape while the sector flatlined.

What to Watch

OPEC+ Sunday 

OPEC meets Sunday and plans to add 188,000 barrels of oil per day to global supply. On paper. The Strait of Hormuz is still closed so most of that oil can't actually ship. The bigger headline: UAE leaves OPEC today. That's one of the group's biggest producers walking out, which weakens Saudi Arabia's grip on global oil prices right when everyone's watching.

Berkshire Hathaway Annual Meeting Saturday 

Berkshire holds its yearly investor event in Omaha tomorrow. Buffett ran it for over 60 years. This is the first one without him. New CEO Greg Abel is sitting on $370 billion in cash, the biggest pile in corporate America. What he buys with it tells you where the smart money sees value. Watch the announcements, not the speeches.

- John

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