May 7th Pre-Market

Good Morning

Quiet open shaping up as we wait on Iran. Their response to the peace memo could hit any minute. Oil staying down and earnings have been a beast and the labor data keeps coming in decent, hard to complain.

The market is clearly leaning toward a yes from Tehran. We've priced in a lot of good news here.

Let's dig in...

Today's Big Picture

Iran's Response Lands Today 

Tehran is reviewing a US memo that pauses the war for 30 days while detailed talks happen. That is a pause, not a deal. Brent dropped under 100 on the news but everything that just rallied in oil, defense, and rates is built on Iran saying yes. A no and that whole trade unwinds in a hurry.

AI Is Now Showing Up In The Layoff Data 

April layoff announcements jumped sharply with AI named as the leading cause for the second month in a row. Tech alone accounted for 33,000 of the 83,000 cuts. This is the first time the AI productivity story is showing up as actual job losses in the macro data, not just earnings call talking points. Tomorrow's payrolls print is the read on whether the broader market has noticed yet.

The Chip Rally Went Global Overnight

Japan's Nikkei jumped almost 6 percent led by SoftBank as Asia caught up to this week's US semi move. Korea is the real story though, up 75 percent year to date while the S&P is up 8. The big money in chips is being made overseas. The Philly Semi Index is now further above its long term trend than at any point in 30 years, and the only two matches are 1995 and 2000.

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Stock Spotlight (pre-market)

Whirlpool $WHR ( ▲ 0.51% )  

Slashed full year guidance and suspended the dividend, blaming the Iran war for collapsing consumer confidence in February and March. The dividend cut is the real signal. Other big-ticket consumer names now have cover to run the same playbook into Q2 prints.

Arm Holdings $ARM ( ▼ 2.22% )  

Beat both lines and guided above consensus, and the stock is offered anyway. They cannot get enough chips for the new AI products.

DoorDash $DASH ( ▼ 1.36% )  

Guided Q2 GOV above consensus and beat Q1 cleanly. The convenience consumer is still spending through tariffs and 100 oil. Uber and Instacart get a direct read through, and the staples versus discretionary trade just got more complicated.

Fortinet $FTNT ( ▼ 1.36% )  

Raised full year billings guidance well above the prior range. Cybersecurity budgets are not getting cut. Palo Alto and CrowdStrike now have a higher bar to clear into their reports, and any soft guide in the group gets punished against this print.

McDonald's $MCD

Beat with adjusted EPS of $2.83 versus $2.74 expected on stronger US traffic. Pricing power is holding while the low end consumer is clearly under pressure. Chipotle and Starbucks both missed recently, so MCD is taking share, and the QSR read through is not as clean as the headline suggests.

What to Watch

CoreWeave Earnings (After The Close) 
The cleanest read on AI infrastructure demand this quarter. Soft guide and the chip rotation reverses fast. Strong guide and the AI trade through Corning, Coherent, and Lumentum has another leg.

NFP Tomorrow (8:30 AM ET) 
April payrolls expected at 62,000 after March's 178,000. ADP came in hot at 109,000 on Wednesday and claims this morning were below expectations. The data keeps saying the labor market is fine, which means a weak NFP would be a real surprise the market is not positioned for.

The Cost Pass-Through Nobody Is Pricing 
Maersk said the energy shock is costing them 500 million dollars per month and that bill gets passed to customers over the summer. Markets are celebrating cheap oil today and missing that the inflation pulse from the war hasn't reached the consumer yet. Watch transports and consumer staples for the first guides that name it.

- John

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