May 6th Market Overview

Happy Wednesday

All right, fresh records on a potential peace deal.

Iran got a one-page memo, oil cracked under $100, then Trump posted that agreement was "a big assumption" and threatened harder bombing if Tehran refuses. Stocks shrugged and finished near the highs. This earnings season is doing more lifting than the macro noise, best overall (so far) earnings quarter in 20 years per Deutsche Bank.

Let’s dig in...

Today's Big Picture

The Compute War Just Broadened 

AMD's ceo Lisa Su told CNBC the demand surge is coming from agents, not just model training. Running agents takes CPUs to orchestrate the work, not just GPUs to crunch the math. She nearly doubled AMD's CPU market growth forecast and now sees a $120 billion market by 2030. Different trade than training. The money is finally catching on.

Best Earnings Season In Twenty Years 

Deutsche Bank ran the numbers and 85 of reporting S&P companies beat on profits, 77 beat on revenue. All eleven sectors are tracking year-over-year earnings growth for the first time in four years. UBS pulled separate data back to 1960 showing record highs don't historically lead to weaker forward returns.

The K-Shape Showed Up At The Pump 

Gas hit $4.54 today, the highest since July 2022. New York Fed research out today showed low earners cut their driving while high earners barely changed habits. Households under $40k actually spent less in nominal terms because they cut consumption that hard. This is the part of the economy the earnings beats don't reach. If anyone needs that Iran deal to land, it's these households.

Market Overview

Index Performance

Stock Spotlight

Sphere Entertainment $SPHR ( ▲ 7.13% )  
closed higher on a Q1 revenue beat. Morgan Stanley raised its target to $170 and reiterated overweight. The stock is on pace for a fourth straight winning year.

Healthpeak Properties $DOC ( ▲ 0.1% )  
ran on a FFO and revenue beat plus raised Q2 guidance to $1.71-$1.75. Healthcare REITs got fresh attention.

Arm Holdings $ARM ( ▼ 2.22% )  
climbed ahead of after-hours earnings. UBS raised the target to $245 from $175 yesterday on the same agentic CPU thesis Su validated today.

Big Name Updates

Disney $DIS ( ▲ 1.38% )  
rose after the Q2 beat. CFO Hugh Johnston explicitly told the call that selling or spinning off the linear TV networks would be "highly complex and unlikely to create value." That kills the activist setup the bears were running. ESPN stays inside.

Oracle $ORCL ( ▼ 3.62% )  
got a Barclays buy with a $240 target. The pitch: every other major AI compute provider is up this year, Oracle is down for the year. The two main bear narratives on the stock contradict each other.

Restaurant Brands $QSR ( ▲ 0.09% )  
fell despite Burger King posting its biggest US same-store sales gain in two years. Tim Hortons and Popeyes disappointed. Markets are paying for the weakest unit, not the strongest.

Novo Nordisk $NVO ( ▲ 1.29% )  
climbed on Wegovy pill demand. 1.3 million prescriptions in Q1 and $353.6 million in sales, more than double the Visible Alpha consensus. International launch later this year.

PayPal $PYPL ( ▲ 0.82% )  
fell on a UK FCA probe into its wallet partnerships with Visa and Mastercard. No findings yet, all three cooperating.

Other Notable Company News

Corning $GLW ( ▼ 4.41% )  
closed higher on the Nvidia $500 million investment and three-plant fiber optic expansion announced this morning.

HSBC $HSBC ( ▼ 0.64% )  
took a $400 million hit from back-leverage exposure to collapsed UK mortgage broker Market Financial Solutions.

GameStop $GME ( ▼ 3.45% )  
chairman Ryan Cohen posted he's "selling stuff on eBay to pay for eBay" while Michael Burry exited his entire position Monday night.

Roundhill Memory ETF $DRAM ( ▼ 6.86% )  
has hit intraday records on 14 of its 24 trading sessions since launch.

Arista Networks $ANET ( ▲ 4.48% )  
continued lower after last night's gross margin miss, the first crack in the AI infrastructure trade against the AMD and SMCI prints.

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Sector Watch

Bond Market

The 10-year sat near 4.35 most of the day. Strong ADP should have pushed yields up but the Iran de-escalation pulled risk premium out at the same time, so they barely moved. The dollar weakened against the yen while gold and silver ran on the same currency-trust story.

Policy Watch

Iran 
The US handed Tehran a one-page, 14-point memo to end the war. The framework covers:

• Iranian moratorium on nuclear enrichment

• US lifts sanctions and releases frozen Iranian funds

• Both sides reopen the Strait of Hormuz

• Iran responds through Pakistan within 48 hours

Trump pulled half the rally back mid-day calling agreement "a big assumption" and warning the bombing returns "at a much higher level and intensity" if Tehran refuses. He also paused "Project Freedom," the US plan to escort ships through Hormuz, while keeping the naval blockade. Goodwill without giving up leverage. Brent dipped below $100 briefly. Gas is $4.54, up 50 since the war started.

AI Oversight 
NEC director Kevin Hassett said the White House is studying an executive order to create an FDA-style vetting system for frontier AI models. He named Anthropic's Mythos directly, citing concerns about AI penetrating secure infrastructure. Microsoft, Google, and xAI just signed deals giving Commerce early access for safety testing. Anthropic and OpenAI have had those since August 2024.

What to Watch

10 AI Stocks to Lead the Next Decade

MarketBeat did an excellent job on this AI infrastructure leaders report

Friday Nonfarm Payrolls 
ADP printed hot. Nonfarm needs to come in soft for the rate cut bid to survive. A second strong jobs print and the trade reverses fast.

Iran Response 
48 hours. Pakistan mediating. If Tehran says no, Trump said the bombing comes back harder than before.

McDonald's Earnings Tomorrow 
Burger King just posted its biggest US same-store gain in two years. McDonald's is the consumer read against $4.54 gas and the K-shape story. The dollar menu has to be working.

Thanks for reading - you are now the more informed 🙂

- John

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