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Weekly Newsletter
📈 New Record High for DOW
📊 Eighth Straight Winning Week for S&P
🏦 Key Points From Jay Powell’s Last FOMC Minutes
💼 Key Takeaways From This Week’s Earnings
🌍 Iran Deal In Sight
QUOTE OF THE WEEK:
“66% of IPOs this year have been SPACs. So the SPAC is back, but you haven't been seeing that headline. And so that is much higher than it was last year. And you're not seeing those micro nanocap companies get out of IPOs this year. But traditional IPOs this year are up 40% versus last year. It's been quiet, right? But they are no doubt out there.” - Jim Neesen, Managing Partner, Connor Group
KEY US ECONOMIC EVENTS NEXT WEEK:
MARKET CLOSE:
WEEKLY MARKET WRAP:
Good Afternoon. Eighth positive week for the S&P with DOW hitting an all-time high. With good news on the war, the markets have more reasons to continue marching higher.
Below are the key things to note this week:
Strong Earnings: All major companies reported earnings this week, including NVIDIA, which beat expectations both on earnings and revenue. The earnings story just keeps getting better this season. More details below in the earnings update section.Inflation: YoY PCE jumped to 3.8% this week, driven by rising energy prices. March’s personal income and outlays report showed a consumer still spending, but with softer real purchasing power and firmer inflation pressure. Personal income and disposable income both rose 0.6% in March, while personal consumption expenditures increased 0.9%; however, after inflation, real PCE rose just 0.2% and real disposable income fell 0.1%. Inflation was the bigger story: the headline PCE price index rose 0.7% month over month and 3.5% year over year, while core PCE increased 0.3% on the month and 3.2% on the year, with gasoline and energy goods the largest contributors to the monthly spending increase; meanwhile, the saving rate slipped to 3.6%, suggesting households kept spending but with less cushion. As Trump posted today about the potential Iran deal, the inflationary pressure from energy prices should ease in the coming weeks.
For the week:
CNN's Fear & Greed Index now stands at 59 (Greed) out of 100, down 14 points from last week. Details here
The top five trending stocks on Reddit are NVIDIA, SPY, AST Spacemobile, Micron, and Rocket Lab. Read More
Liquidity:
Banking Reserves + ON RRP: Banking reserves remain at approximately $3.1 trillion. ON RRP balance remains immaterial.
Standing Repo Operations: The New York Fed’s standing repo operation (primarily reflecting SRF take-up) is almost $0.
Here is a summary of this week’s key economic releases:
Target Rate Probabilities for June 17th FOMC Meeting:
CURATED INSIGHTS & ANALYSIS:
Key points from Jay Powell’s last FOMC minutes:
The Fed held rates steady at 3½–3¾%, citing solid growth, stable labor conditions, and elevated inflation.
Inflation moved higher, with March PCE estimated at 3.5% and core PCE at 3.2%, driven by higher energy prices and tariff-related goods inflation.
Middle East tensions became the dominant uncertainty, raising oil prices, shipping costs, airfares, fertilizer, and other input costs.
Longer-term inflation expectations remained anchored, but near-term expectations rose as energy prices increased.
Participants generally expected tariff effects to fade this year, but the risk of longer-lasting inflation increased.
Labor market conditions remained stable: unemployment held at 4.3%, job gains stayed low, and wage growth moderated.
Low job growth was not viewed as clearly recessionary because labor force growth has also slowed sharply.
Real GDP continued expanding at a solid pace, supported by resilient consumer spending, fiscal support, AI-related investment, and favorable financial conditions.
Real private domestic final purchases (PDFP) rose faster than the prior-year average, signaling stronger underlying demand than headline GDP.
Money markets stayed orderly despite the April tax-date reserve drain, helped by reserve management purchases and limited standing repo usage.
Financial stability risks remained notable, with concerns around elevated asset valuations, private credit outflows, hedge fund Treasury trades, and AI-related cybersecurity risks.
Almost all members supported holding rates, but one preferred a 25 bps cut due to labor-market downside risks.
Three members supported holding rates but dissented against keeping easing-bias language in the statement.
A majority said policy firming could become appropriate if inflation remains persistently above 2%.
The policy message shifted more hawkish: rate cuts are still possible if disinflation resumes or labor weakens, but persistent inflation could force the Fed to tighten.
Key takeaways from this week’s earnings:
NVIDIA cleared a bar nobody else is competing on. Three weeks in a row, the framing on AI infrastructure has been about capex steepening — Eaton's 228GW backlog, Nebius's $25B 2026 capex raise, Cisco's $9B AI infrastructure order target. NVIDIA is the line where all of that flows. Data Center revenue alone is now $75B in a quarter — larger than the entire 2026 revenue base most semiconductor peers will report. The Q2 guide of $91B is approximately $4B above the Street whisper and excludes any China data center compute revenue, even though H200 export licenses have been approved for ten Chinese firms, including Alibaba, Tencent, and ByteDance. The structural read: free cash flow of $49B in a single quarter funded a $20B return to shareholders and an $80B new buyback authorization, with no material balance-sheet stress. I believe the only honest read after this print is that what limits NVIDIA over the next four quarters is supply, not demand — and that the $700B+ hyperscaler capex commitment for 2026 is now a confirmed demand backstop, not a forecast.The U.S. consumer is bifurcating, not weakening. Five retail prints land at the same point on the same map: Target's comp +5.6% on traffic +4.4% ended a five-quarter slide; TJX +6% with HomeGoods at +9%; ROST +17% with management explicitly citing customer growth "across income levels"; Home Depot at +0.6% with the fourth straight quarter of declining transactions offset by ticket; Lowe's at +0.6% with CEO Ellison saying the housing market is "the most difficult since the financial crisis" and explicitly using the phrase "K-shaped economy." The pattern is clean: off-price (TJX, ROST) and trade-down value (Target's traffic, Walmart's +26% eCommerce, Sam's Club at +3.9%) are getting traffic; big-ticket discretionary tied to housing turnover (HD, LOW) is not. In short, the consumer hasn't stopped spending — they're rerouting through value channels. Walmart's reiterated FY27 guidance below Street expectations and a soft Q2 EPS guide were the market's tell that the rerouting carries margin friction: fuel costs absorbed $175M, and pharmacy fair-pricing took 100bps off U.S. comps.
Intuit broke the "AI as tailwind" thesis that Figma proved out last week. Figma's Q1 set up a narrative — AI tooling is accelerating growth, NDR expansion, and AI-credit monetization that compounds. Intuit's print told the opposite story in the same week. The headline beat — $8.56B revenue, $12.80 EPS, FY26 EPS guide raised to $23.80–$23.85 — was matched against a TurboTax FY26 forecast cut from $5.305–$5.330B to $5.277–$5.282B, a 17% workforce reduction (~3,000 jobs), $300M+ in restructuring charges, and an explicit Mailchimp pullback. CEO Goodarzi's memo framed it as becoming "faster, leaner, more focused," but the market read it as the guided-help layer (the human-assisted tax workflow that historically carried pricing power at TurboTax) being attacked by AI agents on both sides — Intuit's own and competitors'. Time will tell whether Figma's seat-plus-consumption model holds, and Intuit's is the canary; the more honest read this quarter is that whether AI is a tailwind or threat depends entirely on whether the customer pays per seat, per use, or per outcome. Intuit's TurboTax is closest to per-outcome, and per-outcome is where the AI competitive pressure is highest.
Deere is the cleanest data center read outside the chip stack. Buried in a name nobody calls AI-exposed: Deere's Construction & Forestry segment grew 29% in net sales and 48% in operating profit, segment sales guidance lifted to ~20% growth for FY26, and the U.S./Canada order book is up 60%+ since November with more than 80% of production slots filled. Management's own attribution: "infrastructure spending, rental fleet replacement, data center projects, and roadbuilding demand." The Tenna LLC acquisition adds equipment-tracking software for fleets. Pair that with Eaton's 228GW data-center backlog and Constellation's 5,000MW PJM submission and the picture is consistent — the buildout is no longer just GPUs, silicon, and power generation. It's now the construction equipment that breaks ground, the trucks that move the dirt, and the rental fleet that staffs the sites. In short, the AI capex cycle has graduated from a thesis about chips into a generalized industrial cycle, and Deere's C&F segment is the cleanest non-tech tape on it. The Large Ag downcycle is a separate story, and Deere believes FY26 is the bottom.
FRONT PAGES:
SpaceX Files S-1, Reveals $18.7B 2025 Revenue: SpaceX flipped its prospectus public Wednesday under ticker SPCX, targeting a June 12 Nasdaq debut at a ~$1.75T valuation and ~$75B raise — the largest IPO in history. 2025 revenue of $18.7B was driven by Starlink (10.3M subscribers across 164 countries, ~9,600 LEO satellites). Musk holds 42% of equity and 85% of voting power via dual-class shares; 30% of the offering is earmarked for retail via Robinhood, Fidelity, and Schwab — 3x the typical mega-cap allocation. Starship payload delivery expected 2H 2026. Read
30-Year Treasury Hits 5.20%, 19-Year High: 30Y yield touched 5.197% Tuesday — highest since July 2007 — with the 10Y at 4.69%, highest since January 2025. Driven by PPI at 6% (highest since Jan 2023), war-driven oil, and deficit anxiety, last week's $25B 30Y auction cleared at 5.046%, the first 5%+ print since 2007. BoA's global fund manager survey shows 62% expect the 30Y to hit 6%. The UK 30Y gilt also hit a multi-decade high. Read
Trump: Iran Peace Deal "Largely Negotiated": Trump posted Saturday that an agreement reopening the Strait of Hormuz is "largely negotiated, subject to finalization" between the US, Iran, and other countries. First phase: a memorandum of understanding; broader talks within 30–60 days. Iranian state media reported 35 vessels transited the Strait in the last 24 hours in coordination with Iran's navy; Rubio rejected Iran's proposed tolling system. Oil bled lower into the weekend; equities notched an 8th straight winning week. Read
Private Credit Strain Deepens at KKR, Apollo, BlackRock: Big managers are scrambling to prop up troubled funds in the $1.8T market: KKR launched a $300M FS KKR buyback after lobbying from investors, BlackRock's TCP cut NAV per share 19% and drew a DOJ probe, and Apollo is weighing a sale of a $3B fund. Blackstone's BCRED non-performing loan ratio hit a record 2.4% in Q1; KKR's related fund default rate is 5.5% and was downgraded to junk by Moody's. BDC redemptions outpaced fundraising in Q1, the worst since 2022. Read
EARNINGS UPDATE:
Primal Thesis
Home Depot's Beat: Revenue $41.77B, up 4.8% YoY, vs. $41.59B Street; adjusted EPS $3.43 vs. $3.41 consensus. Comp sales +0.6% (U.S. comps +0.4%) — fourth consecutive quarter of declining transactions (-1.3%) offset by ticket up 2.2%. Big-ticket transactions over $1,000 grew 0.8%. Gross margin 33%, down 75bps on GMS acquisition dilution. Operating margin 11.9%, down from 12.9%. FY26 guidance reaffirmed: total sales growth 2.5–4.5%, comp sales flat to +2%, adjusted EPS growth flat to +4%. CEO Decker said the core consumer remained "engaged" despite higher gas prices and lower consumer confidence; Pro business is ~50% of revenue and the strategic lean is into contractors and roofers.
● Analog Devices' Beat: Revenue $3.62B, up 37% YoY and 15% sequentially — a quarterly record — vs. $3.51B Street and above the high end of guidance. Non-GAAP EPS $3.09 vs. $2.89 consensus, up 67% YoY. Non-GAAP gross margin 73% (+360bps YoY), operating margin 49% (+780bps YoY). Industrial 50% of revenue, +56% YoY led by aerospace/defense, ATE, and electronic test & measurement. Communications +79% YoY, with data center (75% of comms) up over 90%. Automotive +2%, Consumer +23%. Q3 guidance: revenue $3.9B ±$100M with above-seasonal growth in industrial, automotive, and comms. Management said the manufacturing model can now support up to $20B in annual revenue. Empower Semiconductor acquisition closes ahead with AI-accelerator power upside in 2027.
● Intuit's Beat (stock down ~19%): Revenue $8.56B, up 10% YoY, vs. $8.54B Street; non-GAAP EPS $12.80 vs. $12.57. TurboTax +7% to $4.4B, Credit Karma +15% to $631M (personal loans +9pts, auto insurance +5pts, home loans +1pt), GBSG (QuickBooks) +15% (+17% ex-Mailchimp), online ecosystem +19%, QBO Online accounting +22%, payment volume +30%. FY26 revenue guidance raised to $21.34–$21.37B and non-GAAP EPS to $23.80–$23.85. But: TurboTax FY26 forecast lowered to $5.277–$5.282B (from $5.305–$5.330B) on consumer-segment softness; Q4 EPS guide $3.56–$3.62 vs. ~$3.26 consensus includes $300M restructuring. The big move: 17% global workforce reduction (~3,000 jobs), $300–$340M in charges, Reno and Woodland Hills offices winding down, Mailchimp pullback, TurboTax/Credit Karma overlap eliminated. New $8B buyback authorization and dividend up 15% to $1.20.
● Lowe's Beat: Revenue $23.08B, up 10.3% YoY, vs. $22.98B Street; adjusted EPS $3.03 (GAAP $2.90), +3.8% YoY. Comp sales +0.6% — the fourth consecutive positive quarter — with online +15.5% and continued strength in appliances, home services, and Pro. Gross margin 32.7%, down 70bps on FBM/ADG acquisition dilution. CEO Ellison called the housing market "the most difficult since the financial crisis" and explicitly flagged a "K-shaped economy" — higher-income consumers spending, lower-income consumers pulling back. ~60–65% of revenue is still DIY, where the cycle remains tough. FY26 reaffirmed: total sales $92–$94B (+7–9%), comp sales flat to +2%, adjusted EPS $12.25–$12.75. The Q1 inflation comment: like-for-like ~3%, expected to moderate.
● NVIDIA's Beat: Revenue $81.6B, up 85% YoY and 20% sequentially — a quarterly record, third straight quarter of YoY acceleration — vs. $78.4B Street; non-GAAP EPS $1.87 vs. $1.76, up 140% YoY. Data Center $75.2B (+92% YoY), with Data Center compute $60B (+77%) and networking $15B (nearly tripled). New Hyperscale/ACIE segmentation: ACIE printed $37B (+31% sequential, AI cloud revenue more than tripled YoY). Edge Computing $6.4B (+29%). Non-GAAP gross margin 75.0%, defending the bull view that Blackwell's mix is not yet a margin headwind. Free cash flow $49B (vs. $35B prior quarter); $20B returned to shareholders in Q1. The board approved a new $80B repurchase authorization and raised the quarterly dividend from $0.01 to $0.25. Q2 FY27 guidance $91.0B ±2% with gross margin 74.9% GAAP / 75.0% non-GAAP — and explicitly excludes any China data center compute revenue (no H200 shipments yet booked despite license approvals for ten Chinese firms). Vera announced as the first purpose-built CPU for agentic AI, unlocking a $200B TAM. The number of partner data centers over 10MW nearly doubled YoY.
● Target's Beat: Revenue $25.44B, up 6.7% YoY, vs. $24.66B Street; adjusted EPS $1.71 vs. $1.47 consensus — up 32% from prior-year adjusted EPS of $1.30. Comp sales +5.6%, the first positive comp in five quarters, with traffic +4.4% and broad-based gains across all six core merchandise categories. Store-channel sales +6% (over two-thirds of growth); digital first-party sales +9% with same-day delivery +27%. Target Plus marketplace GMV +60%. Non-merchandise revenue (Roundel ads, Target Circle 360, Target+) +24.6%. Gross margin 29.0% (+80bps) on productivity, supply chain leverage, and lower markdowns. FY26 net sales growth guidance raised to ~4% (from ~2% previously); EPS expected near the high end of the prior $7.50–$8.50 range. First clean quarter under new CEO Michael Fiddelke; tariff refund applications in process.
● TJX's Beat: Revenue $14.32B, up 9% YoY, vs. $14.02B Street; adjusted EPS $1.19 vs. $1.02 consensus, up 29% YoY. Comp sales +6% consolidated — well above plan — with Marmaxx +6%, HomeGoods +9%, TJX Canada +7%, TJX International +4%. Pretax margin 12.0% (+170bps), gross margin 31.3% (+180bps) on stronger merchandise margins, favorable inventory, and fuel hedge gains. $1.1B returned in Q1 via buybacks and dividends. FY27 guidance raised across the board: comp sales to +3–4% (from +2–3%), pretax margin to 11.9–12.0%, EPS to $5.08–$5.15 (from $4.93–$5.02), buyback authorization to $2.75–$3.0B (from $2.50–$2.75B). The guide raises factors in higher fuel costs for the remainder of the year and explicitly does not pass through the full Q1 outperformance. Q2 guided to +2–3% comp and EPS $1.15–$1.17. Store count 5,262, up from 5,214.
● Deere's Beat: Revenue $11.78B (total) / $13.37B (net sales), up 5–7% YoY, vs. $11.55B Street; diluted EPS $6.55 vs. $5.70 consensus (fourth consecutive EPS beat). The segment story is sharply divergent: Production & Precision Ag net sales -14% to $4.50B with operating margin compressed to 15.7% (from 22.0%); Small Ag & Turf +16% to $3.49B with margin 20.6%; Construction & Forestry +29% to $3.79B with operating profit +48% to $561M. CFO Norwood: Large Ag is "below trough levels," Small Ag & Turf "toward mid-cycle," C&F "slightly above mid-cycle." A $272M IEEPA tariff recovery flowed through production costs. The Tenna LLC construction-tech acquisition closed for $439M. FY26 net income guidance held at $4.5–$5.0B; Construction & Forestry sales guidance raised to ~20% growth (from 15%) with margin range lifted to 10–12%; Large Ag still expected down 15–20%. C&F order book up 60%+ since November, with>80% of production slots filled, as management ties strength to infrastructure spending, rental fleet replacement, and data center buildouts. Management still views FY26 as the cyclical bottom for large agriculture, with recovery expected in 2027.
● MUFG's Beat: Full-year FY26 (ended March 2026) net income ¥2,427.2B, up 30% YoY and 116% of the prior guidance — a third consecutive record. Net operating profit ¥2,377.3B, up 49% YoY (106% of guidance). ROE 11.3%, the first print above 11% since the group's formation; ex-equity-holdings ROE ~10.4%. Results exceeded forecasts by 11% despite ¥100B in bond loss-cutting and ¥200B in one-off losses from yen interest-rate hedge revisions in Q4. FY27 (ending March 2027) targets: net profit ¥2,700.0B (+11%) — 10% above the IFIS consensus of ¥2,446B — with net operating profit ¥2,900.0B (+22%), ordinary profit ¥3,950.0B, and credit costs budgeted at ¥350B. Guidance incorporates one BoJ rate hike in July 2026 and a Nikkei assumption in the mid-¥50,000 range. CET1 ratio fell to 9.2% (below the 9.5–10.5% target band) on the Shriram Finance acquisition (-65bps). New ¥100B buyback announced (45M shares, ~0.4% outstanding, canceled by June 2026); FY26 year-end dividend raised to ¥51 per share.
● Ross Stores' Beat: Revenue $6.01B, up 21% YoY, vs. $5.64B Street; EPS $2.02 vs. $1.73, up 37% YoY. Comp sales +17% — well above the +7–8% guide — driven primarily by transaction growth and a double-digit lift in customer count across income levels, ethnicities, and age groups. Operating margin 13.4% (+120bps), with merchandise margin +85bps and occupancy leverage +60bps. Management acknowledged that part of the outsized comp came from higher tax refunds versus last year. $319M returned in repurchases (1.5M shares) under a new $2.55B two-year authorization; $1.275B repurchase target reaffirmed for 2026. 13 Ross and 4 dd's DISCOUNTS stores opened in Q1, with 110 new stores planned for the year (~5% unit growth). FY26 guidance raised: comp sales +6–7% (from +5%), EPS $7.50–$7.74 (vs. $6.61 prior year, up 13–17%). Q2 guided to comp +6–7% and EPS $1.85–$1.93. Tariff refund claims submitted but excluded from forward guidance.
● Walmart's Beat (stock down ~8%): Revenue $177.75B, up 7.3% YoY, vs. $174.84B Street; adjusted EPS $0.66 vs. $0.66 consensus — in-line on the bottom line. Constant-currency sales growth ~6%, 120bps above guidance. U.S. comp sales +4.1% (above the 3.85% Street expectation) despite a 100bp headwind from pharmacy maximum-fair-pricing legislation. eCommerce +26% globally; U.S. delivery +45%; U.S. marketplace +50%; same-day or next-day fulfillment units +150%. Advertising revenue +37% globally (+36% in Walmart U.S.); membership fee revenue +17.4%; advertising and membership together now ~one-third of operating income. Sam's Club comps +3.9% ex-fuel. Operating income +5.0% — depressed by ~250bps from higher fuel costs in distribution and fulfillment ($175M absorbed). FY27 outlook reiterated (net sales +3.5–4.5%, adjusted EPS $2.75–$2.85) but came in below consensus expectations of nearly 5% growth and ~$2.97 EPS; Q2 EPS guide $0.72–$0.74 also light vs. ~$0.75 Street. Stock dropped ~8% on the morning of the release.
EARNINGS PREVIEW:
Date | Symbol | Name | Time |
27-May | CRM | Salesforce Inc | After Close |
27-May | MRVL | Marvell Technology Inc | After Close |
27-May | PDD | Pdd Holdings Inc | Before Open |
28-May | COST | Costco Wholesale | After Close |
28-May | DELL | Dell Technologies Inc | After Close |
28-May | RY | Royal Bank of Canada | Before Open |
28-May | TD | Toronto Dominion Bank | Before Open |
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