May 29th Pre-Market

Good Morning

Last day of May, and it's been a monster month. Futures are green/flat but Dell's blowout last night is dragging the whole hardware group higher again.

Stocks are at record highs while the bond market is pricing in a rate hike this year, and I’ll keep bringing that up until something changes.

Let's dig in...

Today's Big Picture

1. Dell Isn't A Beat. It's A Backlog. 

Dell raised full-year revenue guidance to about $167 billion. Q1 sales jumped 88% to $43.8 billion, and the AI server backlog now sits at $51 billion. Demand is still ahead of supply, so this isn't a one-quarter pop. Samsung also started shipping its new HBM4E memory chip overnight, which tells you the AI hardware bid is still much bigger than one company.

2. The Oil Trade Is Crowded And Early 

Crude is down about 20% from its 2026 high now. Everyone is reading that as the war ending, but Iran is still loading a fraction of pre-war volume and no deal is signed. Capital Economics says refilling drained reserves alone could add 1.2 billion barrels of demand once the strait reopens, about 10 days of global consumption.

3. The Market And The Fed Disagree 

April PCE ran at its fastest pace in three years. Rate pricing has flipped toward a hike this year, and former Trump economist Joe Lavorgna called for 100 basis points of hikes on CNBC yesterday. Stocks closed at records anyway, acting like easy money is coming. If the bond market is right, the rate-sensitive names leading this rally get hit first.

Market Overview

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Stock Spotlight (pre-market)

Gap $GAP ( ▲ 3.95% )  
cut its full-year sales outlook after Old Navy stumbled on weak dress sales, and the stock is indicated lower. The namesake Gap brand actually had a strong quarter on denim and fleece, so this is an Old Navy problem, not a company-wide one.

SentinelOne $S ( ▲ 0.39% )  
guided current-quarter revenue below the Street and is cutting 8% of staff to fund AI investment. A soft guide from a fast-grower is the tell that even hot cybersecurity is slowing down.

Okta $OKTA ( ▲ 5.83% )  
beat and raised its full-year outlook, and shares point higher. The clean counterpoint to SentinelOne, and a sign enterprise identity spend is holding up.

Autodesk $ADSK ( ▲ 1.67% )  
beat on both lines, raised guidance, and announced a $3.6 billion deal for MaintainX, yet shares are lower premarket. When a beat-and-raise still sells off, it tells you how high expectations have climbed.

Amazon $AMZN ( ▲ 0.79% )  
and Alphabet $GOOGL got price target bumps from Truist this morning on accelerating cloud growth. The analyst says Google Cloud growth could hit the mid-80s by year-end while the Street still has it slowing down.

Costco $COST ( ▼ 0.85% )  
said on its earnings call it will return Supreme Court-invalidated tariff refunds to members through lower prices. With $166 billion in refunds in play across importers, watch which retailers pass it back versus pocket it.

What to Watch

Fed Speakers (Today)
Kashkari, Schmid and Bowman all speak. With pricing leaning toward a hike, a hawkish line carries more weight than a dovish one.

Broadcom Earnings (Wednesday) 
Broadcom is the sixth-largest US company and the next read on AI chip demand. A beat confirms what Dell showed last night. A miss puts the broader semi trade in focus.

SpaceX IPO Scaled Back To $1.8T (Sleeper) 
SpaceX dropped its IPO target to $1.8 trillion from above $2 trillion. Musk's post on the Anthropic compute deal also contradicts the company's filing. Both worth watching as the roadshow begins.

- John

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