Good morning and Happy Friday,
 
The S&P gained 0.8% yesterday while the equal-weight 0.6% and Russell 2000 added 1.2%. Tech, Discretionary and Financials led to the upside while Staples, Energy and Utilities led the decliners. Software came under pressure early in the day on news of Starbucks developing AI to displace third-party software with internally-developed products.  However the dip was bought and the group rallied into positive territory. The AI picks and shovels saw strong gains on news that Meta would double compute capacity next year. Crude fell, helping equities overall and put a bid into treasuries, especially at the short end. That pulled yields and the Dollar lower. Precious metals and Bitcoin also advanced.
 
S&P futures are back to their highs this morning but are essentially flat as we approach the Open as well as the on-ramp to the Q2 Earnings Expressway next week. It’s a very quiet day for economic data as well as general news. The Iran situation was relatively calm as both sides look to get back to negotiations following bursts of hostilities the past few days. The S&P is currently up just under 1% this week on the back of Tech strength.  
 

 
In corporate/earnings news:
 

• CCC Intelligent Solutions (CCC +10%) is exploring a sale according to reports.
• Netflix (flat) is looking into live programming and bundling with other streaming services amidst rising concerns over user engagement
• WD-40 is up 15% after a very strong beat-and-raise.
• Delta is flat despite a strong quarter and absorbing “the highest quarterly fuel expense” in its history. Demand was strong and momentum is continuing into 2H.

 
Ladies and Gentlemen, may I present to you your Federal Reserve Task Forces. One of the key takeaways when looking at the composition of the Task Forces is that the Productivity and Jobs Task Force is led by three prominent AI proponents: Venture Capitalist Marc Andreesen (whose firm a16z has invested $10B in AI this year alone), Charles Jones (who recently joined the Anthropic Institute) and Asah Sharma (Xbox division head, which just slashed 3000 jobs). Leaders of other task forces also generally align with less forward guidance, smaller balance sheet and criticism of QE. Treasuries are flat to slightly lower at the longer end, digesting yesterday’s drop. The US Dollar Index is also around unchanged, though off its lows after testing 100.5.
 
US 2yr +0bps to 4.18%, 5yr -1bps to 4.28%, 10yr -1bps to 4.55%, 30yr -1bps to 5.06%
USD index: -$0.02 to $100.67  
 
European markets haven’t done much as they hover around unchanged. Volkswagen is planning to cut around half of its models in response to slowing sales. The Nikkei was up 1.2% overnight, easing its weekly decline to 1.7%. Softbank jumped 10%. Finance Minister Katayama discussed the administration’s desire to increase household and pension investments in Japan’s domestic market. In China, Shanghai fell 1% while the Hang Seng rose 0.6%. AI and chip names saw Thursday’s sharp gains evaporate, including SMIC (-5%), Zhipu (-20%) and MiniMax (-10%). For the week Hang Seng rose 3.5%, its best since October, while Shanghai fell 1.2%. The PBOC set the yuan fixing below 6.8 for the first time since February 2023, continuing to allow the currency to strengthen against the dollar.
 

 
Crude is around unchanged with Brent (Sept) holding above its 200d ma. In its latest monthly report the IEA said global oil demand is rebounding while supply recovers sharply. However demand is still expected to fall this year for the first time since COVID. Precious metals are mixed with gold and silver modestly lower, giving back some of yesterday’s rally. Bitcoin and Ether are higher as BTC trades above $64k while ETH tries to climb above the 50d ~$1775.
 

 
Economic Data:
US:

• 12:00pm WASDE agriculture report
• 1:00pm Rig count

Global:

• Japan PPI m.m / y.y: 0.4% / 7.1% vs 0.3% / 6.8% cons, prior 1.1% / 6.6%
• Canada Unemployment: 6.5% vs 6.6% cons, prior 6.6%