The Morning Call
5/8/26
The
Market
Technical
Thursday in the charts.
Summary:
A return of headline roulette today (Iran's uranium red-lines and US restart
of Project Freedom) left oil unchanged (after intraday violence) and stocks
mixed (RTY battered, NDX best). Treasury yields rose notably while the dollar
and gold chopped around unch as bitcoin tested down to $80k. This week’s
“headlines would have stopped you out, even though you might be right about
direction,” he said.“And that’s happened five times now. It’s close to
untradeable.” Such outsized price swings are a hallmark of thin liquidity.
They’re also a reminder to traders - many of whom were forced out of positions
by a similarly abrupt price move earlier in the war - of just how punishing the
market can be.“I’m calling it a risk-taking desert,” said Scott
Shelton, an energy specialist at TP ICAP Group Plc.“There’s really only
people hedging.”
Thursday in the
technical stats.
https://www.barchart.com/stocks/momentum
https://www.barchart.com/stocks/market-performance
https://www.barchart.com/stocks/sectors/rankings
https://www.barchart.com/stocks/signals/new-recommendations
Wall Street
rebound driven by smallest number of stocks on record.
https://giftarticle.ft.com/giftarticle/actions/redeem/3af1d9a7-50f5-4ae9-a730-a506af6c1901
Risk-on returns
but with cracks below the surface.
https://www.capitalspectator.com/risk-on-returns-but-cracks-still-show-beneath-the-surface/
And speaking of
cracks.
https://www.zerohedge.com/the-market-ear/first-crack-ai-bull
Summary:
High beta momentum was down 8% yesterday. This is one of the top ten one day
moves in the pair over the last five years. What seems to be driving this is
that secular AI themes are selling off post recent extreme performance. Some
profit taking is of course nothing to worry about and the fundamental story
hasn't really changed, but it looks like we're in a short-term trading backdrop
that's a little too stretched.
Friday morning
setup: US equity futures are higher and just shy of a new record, with
technology names leading futures higher ahead of April jobs report, after
Trump’s assertion that the Iran ceasefire is still holding despite an exchange
of weapons between the US and Iran overnight, and a deep weekly
loss for oil help futures regain positive momentum. Markets are
higher ahead of NFP data later this morning following yesterday’s very
‘unwindy’ session (High Beta Momo -7.96%, Software vs Semis +5.83%, Power
-3.44%, HF VIP Longs -1.36%). As of 8:00am ET, S&P futures rise
0.5% and are back over 7,400 while Nasdaq futures gain 0.7%. Pre-market,
Mag 7 are all higher led by NVDA +0.9% and TSLA +0.9%.Sentiment reversed from
Thursday's drop after Trump last night said the recent US strikes on
Iranian military facility does not affect the ceasefire status. This
morning there are reports that Iran seized an oil tanker for violations (one
which was carrying Iranian oil). The Ocean Koi tanker attempted to “disrupt
oil exports and the interests of the Iranian nation.” (Tasnim) Trump’s
10% global tariff under the Section 122 was found unlawful by the US Court of
International Trade, but the outcome was mostly
irrelevant. A busy night with AI headlines: (i) NVDA and IREN announce
strategic partnership on AI infra; (ii) CoreWeave fell on weak revenue guidance
and higher spending forecast; (iii) SK Hynix reported that they have received
offers to invest in chip production lines. (iv) TSMC posted 17.5% growth in
April sales, slowest in six months. Oil (WTI Crude) is unchanged at $94.80;
bond yields are 1-3bp lower the 10Y yield at 4.38%; The dollar headed for a
second straight week of losses. precious metals erased earlier gains with
ags all higher. Today's economic data slate includes April jobs report
(8:30am), May preliminary University of Michigan sentiment and March wholesale
trade sales (10am).
Fundamental
Headlines
The
Economy
US
February
construction spending declined 0.2% versus forecasts of +0.2%; March construction spending was up 0.6% versus +0.2%.
April nonfarm payrolls were
up by 115,000 versus predictions of +62,000.
International
March Japanese YoY
average earnings rose 2.7% versus estimates of +3.2%; the April services PMI
was 51.0 versus 51.2; the April composite PMI was 52.2 versus 52.9.
The March German
trade balance was E14.3 billion versus expectations of E18.4 billion; March industrial production fell 0.7% versus +0.5%.
Other
US/China trade shows signs of bottoming.
https://politicalcalculations.blogspot.com/2026/05/fall-in-direct-us-china-trade-showing.html
Update on the housing market’s ‘spring selling
season’.
https://wolfstreet.com/2026/05/06/housing-markets-crucial-spring-selling-season-is-in-tatters/
Vehicle sales fall in April.
https://www.advisorperspectives.com/dshort/updates/2026/05/07/vehicle-sales-fall-1-5-in-april
More detail on yesterday’s jobless claims
number.
https://bonddad.blogspot.com/2026/05/jobless-claims-most-positive-data-of.html
Latest NY Fed survey---inflation expectations
at three year high.
Iran
Overnight news.
AI
Goldman’s deep dive into the agentic economy.
Summary:
"at its fullest, Agentic AI can handle a wide range of tasks
currently done by humans in a fully autonomous way. On the other hand, Agentic
AI could be misdirected and counterproductive, consuming vast resources with
little return." In this report, Goldman outlines some of the likely use
cases for Agentic AI across the enterprise and consumer sphere - and
quantifies potential upside to business outcomes, along with the investment
levels required. It concludes with its top trade recommendations for
the sector.
- AMZN (Buy, $325 12-m PT): Continue to see
visibility into returns as AWS revenues compound, supported by a reported
$364bn revenue backlog, driven by both AI workloads and rising momentum
around its custom silicon (Trainium, Graviton, etc.).
- GOOGL (Buy, 12-m $450 PT): Alphabet is seeing
momentum across its Cloud business and Search multi-modality, leveraging a
full-stack approach as management continues to see AI repositioning the
company for sustained growth.
- META (Buy, 12-m $830 PT): Meta remains a
leader in its core advertising business (significantly outpacing
total digital ad industry growth) as the application of AI-related compute
is driving momentum around engagement and ads monetization.
- AVGO (Buy, 12-m $480
PT): As the market leader in custom computing, Goldman sees more
hyperscalers (Google) and LLM model providers turning to Broadcom to
deliver cost-optimized chip solutions tailored to their specific
workloads.
- NVDA (Buy, 12-m $250 PT): Nvidia can
retain its dominant market leadership in the medium term as it remains the
leader in AI performance across a broad range of training and inference
workloads.
- AMD (Buy, $450 12-m PT): AMD’s
market position is strengthening as the company scales its
high-performance datacenter GPU offerings over the next two years.
Importantly, AMD is also poised for an increasing share of agentic AI
workloads in the enterprise as it gains share in X86 server CPUs and the
CPU attach rate increases.
- MSFT (Buy, $610 12-m
PT, covered by Gabriela Borges): Copilot feedback is getting better and
the E7 upgrade cycle may drive further acceleration in Microsoft 365. The
most likely scenario may be an ecosystem where Copilot coexists alongside
domain-specific agents and domain-specific app software, and the usage of
one pulls through usage of the others reciprocally.
- NET (Buy, $250 12-m PT, covered by
Gabriela Borges): Goldman expects Cloudflare to take outsized share of AI
inference workloads because of its performance and cost advantages, in
turn driven by its architectural network advantages and the sophistication
of its isolates software.
- ACN (Buy, $300 12-m PT, covered by
Jim Schneider): Goldman expects Accenture to see growing tailwinds
from agentic adoption as enterprises increasingly move from AI pilots to
scaled agent deployments, driving demand for integration, workflow
redesign, governance, and change management.
How do we get moral AI companies?
Worth every dollar
until it isn’t.
https://www.zerohedge.com/markets/worth-every-dollar-until-it-isnt
Investing
A stunning quarter for earnings.
https://www.zerohedge.com/markets/stunning-quarter-highest-earnings-growth-over-two-decades
Why investors
buying dividend paying stock might be disappointed. The author misses two
important points: (1) if one buys stocks of companies that raise their dividend
every year, then every year the investor’s yield on cost goes up, narrowing whatever
gap there is between the stock’s yield on cost and the bond yield, and (2)
stocks are priced on the discounted value of future cash flow. Which means in buying
Nvidia, the investor is betting on a huge dividend return in the future. While
that works sometimes, in many cases, the company doesn’t deliver that dividend growth
return and the investor ultimately loses out (see Cisco). This is a case of a
bird in the hand (a dividend growth stock) versus two in the bush (the bet that
somehow a nondividend paying stock will justify its current price).
The inflation
diversification problem. I include this because I like the analysis of
inflation’s impact on the stock/bond mix in a portfolio. However, the last one
third of the article is a sales routine for the author’s company; so treat it
as such.
https://www.man.com/insights/inflation-diversification-problem
The recent
Treasury auctions show no decline in demand.
https://www.advisorperspectives.com/commentaries/2026/05/07/when-100-not-good-score
Gold demand up in
Q1.
https://talkmarkets.com/article/gold-demand-up-in-q1-sets-record-in-value-terms-1778166921
Green shoots for
gold.
https://www.zerohedge.com/precious-metals/green-shoots-gold-china-adds-most-bullion-2024
Summary:
Central banks added gold at the fastest pace in more than a year in the
first quarter, according to data from the producer-funded World Gold
Council, underscoring continued appetite for bullion. China is among the
largest buyers, with overall central-bank purchases still outweighing sales by
a handful of institutions. In fact, as Bloomberg macro strategist, Brendan
Fagan, pointed out this morning, gold is poised to stabilize with
demand re-emerging and prices modestly rebounding as developments in the
Middle East offer intermittent support against the headwind of
higher-for-longer rate expectations.
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