Breathe, Decompress, and Assess the Last Five Days: Taking Stock

(Bloomberg) -- It’s a pretty uneventful morning for asset moves or head-spinning news (the VIX pressing 13 corroborates that), or the opposite of the last five days. The S&P 500 futures are up six handles and near the highs, 10-year yields are moving further below the 3% level, the dollar is down a smidge, and crude is taking a breather after a monster month.

Nvidia leads the list of must-know equity movers. Shares initially fell around 4% last night (taking AMD and rest of the semis crew with it), but has since bounced and is only down ~1% in the pre-market, which is rather impressive given the 15% run-up over the past six days into the print.

Most of the analyst reactions are uber-positive, with many citing the de-risking of crypto as a huge plus. The only negatives I’ve seen so far are Gene Munster saying the data center numbers didn’t clear the "high bar" (though others see it differently) while MKM Partners cites near-term uncertainties in the gaming segment as well as the valuation.

Other big earnings-related moves:

• Positives: Steel giant ArcelorMittal up 2.3% in Amsterdam, ad tech firm The Trade Desk surged 22%, smallcap cybersecurity stock ForeScout Tech gained 7%, and Noodles & Co. up almost 6%
• Negatives: Cybersecurity firm Symantec sinking almost 20% (already four downgrades after revealing the internal investigation sparked by concerns from an ex-employee), Dropbox -4% after its first earnings report (this is another one that has run up into the numbers, and in general since the March IPO), YELP -4.6% (worries over slowing traffic) and flow control name Flowserve down ~8%

There isn’t a ton on the agenda today aside from some eco data and Trump’s much-anticipated (and much-delayed) speech on drug prices, which is reportedly going to focus on increasing pharma competition to lower out-of-pocket costs -- so far we’re seeing minimal reaction in the stocks and no real indication yet on the biotech ETFs.

Breaking Out, and What’s Up for Next Week

Whereas we’ve seen rallies of late get sold almost immediately, the one we’ve experienced over the past week appears to be sticking -- which is even more impressive given the "wall of worry" that people keep going on about -- the S&P is now up almost 2% year-to-date (after flip-flopping from positive to negative eight times so far in 2018) and has now closed above the 2,700 mark, the 100-day moving average at 2,706, and the downward-sloping trendline that’s been in place since the late-January peak.

Positives to point to for yesterday’s big breakout include the opposite-of-hot CPI print, a pullback in the 10-year yield as a result (further away from 3%), a stalling in the dollar’s massive rally, some sanguine signs on the China trade front (some pointed to the WSJ report yesterday morning about China likely offering to import more U.S. goods during talks next week), some decent earnings (like $20b market cap CenturyLink climbing 7.5% and Internet name Carvana finishing up more than 8%), and a persistent surge in large-cap tech, with the NYSE FANG+ Index (NYFANG) creeping closer to its March peak.

Next week brings the Nafta deadline (at least that’s what Paul Ryan is clamoring for), more China trade noise (hopefully some indication of whether we’re closer or further apart from a deal), and a smattering of earnings in retail, tech and elsewhere: Macy’s, which got decked by a Morgan Stanley downgrade yesterday and Walmart, which just sold off on the massive Flipkart deal, along with Home Depot, JC Penney, Nordstrom, Cisco, Tencent, Applied Materials, Take-Two, Deere, and Campbell Soup.

We’ll also get a few conferences to keep tabs on (Barclays select franchise, JPMorgan tech, MoffettNathanson media, BofAML health care, Goldman basic materials, BMO farm-to-market, Tudor Pickering energy, Citi energy) as well as investor meetings held by Honeywell, Starbucks, Johnson & Johnson, and a boatload of others.

And we’ll get the quarterly deadline for 13-F filings, where I’m going to ask who sold Facebook, who pulled a Buffett by snagging up more Apple shares, and who held NXP Semi before the breakdown? Inquiring minds want to know..

Notes From the Sell Side

It’s relatively quiet, given the probable burnout from earnings season, so chances are high for a barrage of notes Monday morning as the sell-side reboots. But until then, here are some of the biggest calls today:

Nomura Instinet revisits the bull case on Tesla, laying out a path for shares to hit a ~$100b valuation (or $500 stock price vs its last close at $305) within two years.. JPMorgan moves VZ to overweight after meeting with the CEO, citing the 5% yield and the 5G "un-priced option".. BofAML makes some shifts in E&C land, upgrading JEC to buy (shares up 12% since earnings three days ago) and downgrading MG to underperform..

Tick-by-Tick Guide to Today’s Actionable Events

• 8:27am -- Tiger Woods, Mickelson, Fowler tee off at The Player’s Championship
• 8:30am -- Import Price Index
• 8:30am -- Fed’s Bullard speaks on the economy
• 8:30am -- CTB investor day
• 9:00am -- TFX investor day
• 10:00am -- University of Michigan Sentiment
• 2:00pm -- Trump scheduled to deliver speech on drug prices
• 5:00pm -- NXPI/QCOM tender offer expires

To contact the reporter on this story: Arie Shapira in New York at ashapira3@bloomberg.net.

To contact the editors responsible for this story: Chris Nagi at chrisnagi@bloomberg.net, Steven Fromm

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