May 22nd Pre-Market

Good Morning

Potentially Eight straight green weeks on the S&P heading into a long weekend.

Goldman says hedge fund shorts are at a ten-year high which is wild when you think about it. New Fed Chair gets sworn in today, Iran peace talks moving forward but still unresolved, and markets are closed Monday.

Let's dig in...

Today's Big Picture

1. Hedge Funds Are Betting Against This Rally At Record Levels

Goldman data shows hedge fund short positions in U.S. stocks just hit a ten-year high. Sounds scary but here's the context: hedge funds short more when they're up big, it's how they protect gains. The S&P is grinding toward its eighth straight weekly gain and these funds are riding it with one hand while hedging with the other. The interesting part is what happens when those hedges unwind.

In April, a similar setup triggered forced buying that actually pushed the rally higher. So the record short positioning everyone is worried about could just as easily become the fuel for the next leg up.

2. Iran Talks Stalled On The Two Things Neither Side Will Budge On 

Iran's Supreme Leader said enriched uranium stays in the country. Trump rejected Iran's push to toll the Strait of Hormuz. Those are the two core issues and neither side moved this week. Brent is back above $105, the IEA says summer travel demand could tighten oil markets further, and MUFG thinks full supply normalization is a 2027 story at the earliest.

3. Warsh Takes Over The Fed As Rate Expectations Flip 

Trump swears in Kevin Warsh as Fed Chair today, replacing Powell. When the war started, markets expected two rate cuts this year. Now they're pricing in better than even odds of a hike. That's the hand Warsh was dealt and his early signals on inflation and the yield curve will set the tone for months.

Market Overview

Today’s Sponsor

5 Zacks experts scan thousands of publicly traded companies. » Then select one apiece.

 See them now.

Our team of 5 Zacks experts scan thousands of publicly traded companies and selects a single stock apiece, with the best realistic shot at gaining +100% or more in the next 12 months.

Every company also carries a strong Zacks Rank, meaning earnings estimates are already trending upward. These aren't companies you simply hold and hope.

These are positioned to start moving.

Download “5 Stocks Set to Double now”.

Stock Spotlight (pre-market)

Futu $FUTU ( ▼ 0.69% )  
Down 36% after China launched a crackdown on illegal cross-border securities trading. PDD $PDD and Alibaba $BABA getting dragged down with it.

Workday $WDAY ( ▼ 3.76% )  
Beat on revenue and profit, raised full-year margin outlook. Subscription revenue grew 14% to $2.35 billion. Co-founder Aneel Bhusri came back as CEO.

Estee Lauder $EL ( ▲ 0.91% )  
Up big after ending merger talks with Puig. Puig is down 14% in Europe. The market didn't want this deal and the price action is confirming it on both sides.

IBM $IBM ( ▲ 12.43% )  
Still rallying after landing $1 billion from the government's quantum grant program. France announced another $1.16 billion for quantum today. Two governments put $3 billion into quantum in 24 hours. T

Booz Allen $BAH ( ▼ 1.42% )  
Crushed earnings estimates at $1.78 versus the street's $1.32. Revenue came in light. The overhang is political. Treasury canceled all 31 contracts earlier this year and Bessent publicly said he lost confidence in the firm. Earnings are clean but the government relationship is not.

IMAX $IMAX ( ▼ 0.99% )  
Up after the Wall Street Journal reported the company is exploring a sale. Premium theater is a scarce asset with real pricing power. Merger arb desks are sizing positions this morning.

What to Watch

IPO’s

MarketBeat did an excellent job on this free IPO guide.

Warsh's First Words Matter More Than The Ceremony 

The swearing-in is photo op. What moves markets is whether he says anything about inflation, the yield curve, or oil before Tuesday's open. First impressions from a new Fed Chair set the tone for months.

UMich Sentiment Final Read (10:00 AM ET) 

Skip the headline number. The inflation expectations reading inside this report is what matters. If consumers see prices accelerating, Warsh inherits a credibility problem on day one. across all of emerging Asia.

Friday Into A Long Weekend 

Markets close Monday. Thin volume plus unresolved Iran headlines plus a new Fed Chair is how you get outsized moves on any stray headline this afternoon. I'd expect the tape to get defensive into the close.

- John

Today’s Sponsor

The $60B Anime & Manga Boom is Finally Open to Investors

When people hear anime & manga, they think of cartoons and comics. But nowadays, they should be thinking of dollar signs.

The global anime and manga market’s worth $37B, projected to hit $60B by 2030. Which makes TOKYOPOP’s first investment opportunity for outside investors all the more exciting.

TOKYOPOP helped bring anime and manga to the West nearly 30 years ago. Fast forward to today, they’re generating $15M in annual revenue, have 100+ IPs in their portfolio, and distribution across 50+ countries.

They’ve got licensing rights to IP for Disney, Nintendo, Warner Bros., and more, and distribution locked down through Penguin, Amazon, Barnes & Noble, and beyond. Now, they’re on a mission to find and scale the next breakout anime franchise.

For decades, this investment wasn’t available. Not anymore. Get 5% in guaranteed TOKYOPOP investor bonus stock by May 6 as they scale toward $50M in targeted 2030 revenue.

Invest in TOKYOPOP Today

^{This is a paid advertisement for TokyoPop Regulation CF offering. Please read the offering circular at https://invest.tokyopop.com/}