May the Fourth be with you,
 
Last week US equities markets extended the weekly winning streak to four, despite the increase in oil prices and yields. It was a busy week of economic data, central bank rate decisions, Iran headlines and earnings. The latter have been very strong, particularly for companies that are exposed to the AI capex boom which has helped to propel the S&P 500 to new all-time highs over the last month rivaling the Millenium Falcon’s hyperdrive.
 
There has been some Iran related volatility this morning. Yesterday, President Trump announced Project Freedom, to guide stranded ships out of the SOH. Less than 24 hours later ~6:00 am there was a report that a US naval ship had been struck by Iranian missiles sending oil prices higher and equity futures lower. However, about an hour later that was refuted and markets have reversed a good portion of that initial move. CENTCOM has since stated that 2 U.S. flagged merchant vessels have successfully moved through the Strait. It has been a volatile overnight session in oil with ICE Brent up ~2% holding ~110 (Range 105.55 - 114.30). S&P futures were down ~0.5% at the lows but are now only slightly lower.  Russell futures are underperforming slightly. There is some outperformance in tech stocks in the pre-market particularly memory names.
 

 
It will be a busy week of earnings but starting the week of slowly. Below are some corporate highlights:

• Berkshire +0.5% (earnings) - It was Greg Abel’s first time leading the annual meeting. Results were generally solid across business lines. The company continued to hoard cash reaching nearly $400B just under 40% of mkt cap. The company continued to trim its equity portfolio selling $8.15B (portfolio value $288B). There was some disappointment that the co. only bought back ~$235ml in stock.
• Norwegian Cruise Lines (earnings >-5%) - beat for the quarter but cut guidance saying, “The Company is experiencing headwinds related to disruptions in the Middle East, including higher fuel expense and signs of softer demand as consumers reevaluate travel plans, particularly to Europe”.
• Amazon - announced it is launching Amazon Supply Chain Services extending logistical services to businesses of all types and sizes which is weighing on FDX/UPS/GXO.
• Gamestop (-5%) made an unsolicited offer to buy the much larger eBay (+>5%) for ~$56B in cash and stock
• Hubbell to buy NSI Industries for $3B from Sentinel Cap
• GBTG being bought for ~$6.3B (9.50/sh) by Long Lake Mgmt.

 
Yields are moving higher by a couple of bps this morning. After the open factory orders will be released. This afternoon the loan officer survey will be released and the Treasury refunding estimate comes out at 3:00. This afternoon NY Fed President Williams will be speaking as well.  The USD index is modestly higher. There was another spike in the Yen around midnight sparking speculation of another round of intervention. It traded down to ~155.50¥/$ again but has since reversed currently ~157¥/$.
 
Government Yields

• US 2yr +2bps to 3.87%, 5yr +2bps to 4.01%, 10yr +2bps to 4.37%, 30yr +1bps to 4.95%
• USD index: +$0.11 to $98.59

 
Japan, China and the UK were closed for holiday. South Korea re-opened after being closed hitting new all-time highs up ~5%. A senior Bank of Korea official said the central bank should consider a rate hike. The Hang Seng also ended up >1%.  Most European indices are pulling back modestly with autos under some pressure after President Trump announced a 25% tariff on EU imported autos. Financials are also under some pressure.
 
 
 
Moving to commodities energy prices are moving higher again as documented above. Metals are under some pressure extended last week’s losses. Gold is down >1% but has recouped about half of the overnight losses after retesting last week’s low. Ag is mixed. Crypto is moving higher after Senators Tillis and Alsobrooks released an updated compromise on stablecoin yield in the Clarity Act which was backed by Circle (+6% and Coinbase (+3.5%). Bitcoin was testing 80k overnight but pulled back with the Iran related volatility.
 

 
 
Earnings:
Pre-Market: CCOI, CNA, L, NCLH, PNW, TSN
After-Market: ALSN, AMRC, BWXT, FANG, GRAB, INSP, JELD, NJR, NUVB, ON, PLTR, PINS, PSKY, RIG, VNO, WMB
 
Economic Data:
US:

• 10:00 Factory Orders
• 2:00 Loan Officer survey
• 3:00 Treasury Refunding Estimate

Global:

• India Manufacturing PMI (final): 54.7 prior 55.9
• EU Manufacturing PMI (final): 52.2 prior 52.2