Good morning,
 
Yesterday US equity markets rallied despite the escalation in Iran pushing oil prices and yields higher. It was the second consecutive day where tech outperformed with semi/memory stocks up >5%. The S&P 500 reclaimed its 50d ma at the open and continued to grind higher throughout the session, closing up ~1% just over 7,500. Small/mid cap indices were also up ~1%. Outside of tech the focus was on earnings - while the results were generally solid the stock reactions were pretty tepid. Tariffs also re-entered the conversation with the post SCOTUS decision 10% blanket tariffs set to expire on Friday. Crypto rallied amidst reports that President Trump agreed to the ethics provision within the stalled Clarity Act. Treasury Secretary Bessent said the bill was on the 1-yard line calling for Congress to pass it, the MAC Desk coaching staff prefers a running play just remember what happened in Super Bowl XLIX - 49 days until the NFL season starts.
Futures began to drift lower overnight as tech heavy indices in Asia failed to hold opening gains. Oil prices are pushing to fresh recent highs as the administration steps up strikes. On social media President Trump just said, “From this point forward, any time the Islamic Republic of Iran shoots at a ship in the Strait of Hormuz, the US will bomb one bridge or power plant.” Tech is under some pressure despite the SMCI pre-announcement and AMD/Anthropic partnership ahead of this evening's earnings (GOOGL/TSLA). OpenAI is also in the headlines after the company said two of its AI models escaped a test environment and hacked Hugging Face, an opensource AI platform. Cybersecurity stocks are slightly higher in the pre-market.  It is another busy day of earnings while the economic calendar is pretty much empty. S&P futures are giving back about of third of yesterday’s gains putting the 50d back in play again.
 

 
Earnings/New recap -
 

• Tech
  • SMCI ( up >10%) - pre-announced revenues at low-end of guidance but margins nearly 2X estimates. Company also announced a massive jump in orders $>60B
  • PEGA (down >10%) - most recent software company to miss estimates calling out AI - “unprecedented changes in the AI market caused clients to delay their purchasing decisions.” Service Now earnings after the bell will be very important for the group. IGV hovering around unchanged in the pre-market.
  • AMD/Anthropic - WSJ reporting that Anthropic will purchase up to 2GW of Instinct MI450 chips starting in second half of ’27. AMD will invest $5B in the company and will provide a financial backstop for Anthropic data center leases
  • MNDY - to cut 20% of workforce
• Industrials
• GE Vernova (~-5%) - looks like an EPS miss but somewhat unclear whether the numbers comp to consensus. Highlights very strong demand with power orders up 135% y/y and electrification up 93% though wind fell 39%. Big increases in rev guidance ($45.5-46.5B prior $44.5-45.5B) and cash flow ($11.5-12.5B prior $6.5-7.5B)
• OTIS (around unch) - Q2 EPS inline with revenue beat but margin miss. Cut full-year EPS to $4.01 - $4.05 from $4.20 - $4.24 highlighting weakness in Asia Pacific region
• WAB (+4%) - modest beat and raise. FY ’26 EPS $10.60 - $10.90 raising midpoint 0.30c
• AT&T (+4%) - solid results with net adds in wireless and fiber ahead of estimates. Co reiterated FY guidance and announced accelerated share repurchases in 2026
• Comm Services
• Financials - solid results from CME, CB, MCO and COF

 
The economic calendar remains sparse. Mortgage apps ticked up slightly on a w/w basis. Treasury yields up ~1bps but are getting pretty close to YTD highs for reference (2yr ~4.3%, 10yr 4.7%, 30yr 5.2%).The USD index is hovering ~$101. Bloomberg confirmed yesterday’s FT tariff story. President Trump also announced tariffs on imported generic drugs would jump from 0% to 100% in two years and 200% in year three in hopes on reshoring manufacturing.
 

• US 2yr +0bps to 4.21%, 5yr +0bps to 4.33%, 10yr +1bps to 4.60%, 30yr +1bps to 5.12%
• USD index: +$0.06 to $100.85

 
It was a mixed overnight session. Tech heavy indices in Asia rallied at the open but faded throughout the session to end mixed. In Japan trade data showed strong increases in both imports and exports. The Yen hit fresh lows crossing over 163¥/$ but briefly rallied following a Bloomberg report that said BOJ insiders are open to raising rates faster pace than consensus expectations. The central bank is widely expected to leave rates unchanged next week with an additional hike expected in December. Speaking of central banks Indonesia’s central bank surprised markets by leaving rates unchanged overnight. After opening slightly lower European indices have moved into positive territory. In the UK June inflation data showed some moderation coming in a touch better than expected. Yields across the region are moving modestly higher with some flattening of the curve.
 

 
Oil prices are up >3% with ICE Brent briefly trading back over $95. Natural gas prices are moving higher in both the US and Europe. Precious metals are extending this week’s move higher breaking some of the recent correlation with oil/yields. Gold and silver are both breaking above their 20d ma for the first time in a couple of months. Copper is pulling back modestly. Ag is moving higher. Crypto is pulling back modestly after yesterday’s gains as there is some pushback related to the ethics provisions.
 

 
Earnings:
After-Market (Tues): AIR, ALK, COF, CB, EQT, FFBC, HWC, IBRK, MCB, NBHC, NLY, RRC, VALE (production & sales), WBS, WAL, WFRD
Pre-Market: BKU, BMI, CALM, CCS, CME, GEV, IRDM, MCO, NTRS, OTIS, PHM, PM, RPM, T, TEL, TDY, TNL, WAB
After-Market: AVB, CCI, CSX, EQR, FAF, FULT, GGG, GL, GOOGL, GTY, IBM, KALU, KNX, LBRT, LUV, MEDP, NOW, OII, PKG, RJF, RNR, RS, SANM, SLG, SON, TCBI, TSLA, TXN, WEX, WH
 
Economic Data:
US:

• Mortgage Apps: 1.9%w.w prior -2.7%; 30yr Rate- 6.69% prior 6.65%
• 10:30 Oil Inventories

Global:

• South Korea PPI: 0%/8.6% m.m/y.y prior 0%/8.6%
• Japan Imports: 25.4% vs. 21% cons., prior 12.5%
• Japan Exports: 19.3% vs.  18.6% cons., prior 16.8%
• UK CPI: 0.1%/2.6% m.m/y.y vs. 0.1%/2.7% cons., prior 0.2%/2.8%
• UK Core-CPI: 0.3%/2.6% m.m/y.y vs. 0.3%/2.5% cons., prior 0.3%/2.6%