U.S. Futures & World Markets

Mega-cap tech earnings were strong across the board, but there is nuance under the surface. Google (+7% premarket) delivered a clean beat on impressive cloud results and a resilient online search business. Amazon's AWS business is cruising right along, and its chips business is crushing it (AMZN +2.5%). Meta (-9%) posted strong numbers, but investors fear their massive spending. As for Microsoft (-2%), guidance was raised and revenue growth is accelerating — but expectations were already high going into the print.

In Fed Chair Powell's last press conference, he pointed to a more "balanced" approach to future monetary policy. Oil is still the key variable. Higher-for-longer oil prices may increase the chance of a rate hike, and it looks like near-term rate cuts are firmly off the table. The Iran conflict makes this a logical view, and it was already priced in by the market.

What continues to stand out is how resilient the US economy has been in the face of higher energy prices. Datatrek Research summed it up well:

"Oil price spikes, for example, used to cause a quick downturn in the US economy and this gave the Fed leeway to cut rates. Now, we've had two oil price spikes in the last three years, and the American economy has simply sailed through both events."

Datatrek Research

Let's see if that resilience can continue.

S&P Futures vs. Fair Value: +31.00  |  10-Year Yield: 4.40%

CORE Headlines

Charts & Data

The most important chart of the day: gas prices vs. wages. Richard Bernstein Advisors via Daily Chartbook: "Higher gasoline prices might annoy consumers, but this chart suggests gasoline prices aren't yet high enough to change their behavior." Consumer spending holding up despite the energy shock is the key macro story right now.

AI impact on earnings is becoming quantifiable. Morgan Stanley via Daily Chartbook: "More and more companies are mentioning quantifiable benefits from AI." This is the shift from narrative to numbers — and it matters for forward estimates.

Earnings boom is a global story, not just a US one. Jurrien Timmer, Fidelity via Daily Chartbook: "While it's tempting to lay it all on the AI story, earnings are booming even faster outside the US. The year-over-year change in forward estimates is 25% for the MSCI ACWI ex-US index, vs 23% for the MSCI US index."

Bullish seasonality signal to watch. @sjd10304 via Daily Chartbook: "Since 1960, when the S&P 500 closes the month of April at a new all-time high monthly close, the remainder of the calendar year's performance has never been negative — a perfect 17 for 17, with average returns of 10.35%. Closing above 6,939.03 will do the trick."

Active funds are still underweight tech. Variant Perception via Daily Chartbook: "Despite the semi/dot-com bubble headlines, we aren't seeing many LPPL exhaustion signals in Information Technology yet. The latest data actually shows active funds are still underweight tech. Instead, Utilities are flashing the most aggressive bubble exhaustion signals at present."

Retail trading levered semi ETFs at historic extremes. Goldman Sachs via Daily Chartbook: "Retail participation in SOXS (3x short semis ETF) and SOXL (3x long semis ETF) has reached the 97th and 99th percentiles, respectively, on a 5-year lookback." Levered ETFs serve no useful market purpose. Just go to a craps table if you want to gamble.

Cyclical sector rotation continuing. JPMorgan via Daily Chartbook: "Industrials, Energy, and Materials remain among the sectors drawing significant capital inflows, reflecting a continued rotation into cyclical sectors."

Oil and inflation passthrough. Goldman Sachs via Daily Chartbook: "Our commodity passthrough model suggests that oil and other commodity price increases will boost core PCE inflation by 0.35pp this year."

UAE leaving OPEC matters. Larry Adam, Raymond James via Daily Chartbook: "The UAE's departure from the group would reduce the cartel's aggregate share of global oil output from ~32% to ~28%, diminishing OPEC's ability to influence prices."

US petroleum exports hit a record. @staunovo via Daily Chartbook: "US petroleum exports (crude + refined products) hit a record 14.179 million barrels per day last week." The US is filling the supply gap created by the Iran blockade.

Interesting Reads

Want this in your inbox every morning?

Morning Core subscribers get this analysis two days before it's published here — plus charts, data, and Nick's unfiltered take on the markets. It's free.

Subscribe to Morning Core — Free
This content does not constitute legal, tax, accounting, or other professional expert advice. Everything published is believed to be reliable, but its accuracy or completeness is not assured. Past performance does not indicate future results. The opinions expressed herein are subject to change without notice and are solely those of the author as of the date indicated.