Vital Dawn Podcast for Thursday April 23

Welcome to the Vital Dome Podcast for Thursday, April 23rd. U.S. equity futures are seeing pressure so far this morning. So S&P futures are down about 40 points, that's 60 basis points. Dow futures, NASDAQ futures are both off about 60 basis points. So that's about 330 Dow points, that's 170 NASDAQ points. Russell futures are lagging a little bit, down about 21 points or 75 basis points. In Europe, the major indices are down about 40 to 75 basis points. You're seeing underperformance in Europe in autos, tech, banks, insurance, and media. You're seeing outperformance in utilities, energy, telecom, healthcare, and consumer staples. And then turning to Asia, you generally saw losses across the board. The Nikkei fell 75 basis points. Hang Seng dropped 95 basis points. China Comp fell 30 basis points. Korea was an outlier. It rallied about 1%. So the real focus this morning is on earnings. There were a ton of reports out last night in the US, a ton of reports out of Europe this morning. I would say the big controversy is kind of semis versus software. So there were a lot of bullish semiconductor earnings reports, including the semiconductor, Lamb Research, SK Hynix, STM and text instruments. STM and text instruments are the really big upside standouts simply because expectations were the lowest for both of them. So these are kind of non chip companies they do have AI exposure but they not some of the more they don have kind of exclusive AI exposure like others in semiconductors So they both did the best versus expectations They're seeing big gains out of both of them. But the whole group really continues to perform very well. You're seeing AI remain extremely strong, while a lot of the non-AI categories are also showing improvement, including industrial, which is the STM and text instruments drivers. The software front service now is getting hit very hard. Two big issues, one of which is the unrest in the Middle East caused some deals to slip out of Q1. So that weighed on their subscription revenue growth. And then also this recent acquisition they did is going to be dilutive to margins. And so that caused them to reduce their margin forecast for the year. So that stock's getting hit hard. IBM, their software revenue also came in a bit below expectations. So definitely going to be a big kind of bifurcation today of semis versus software. On Tesla, Q1 numbers were solid, thanks in large part to their auto business. The problem is Tesla shareholders don't think it's an auto company. So you're talking about a company that, again, trades at 200 plus times on a PE basis because of anticipation for all these non-auto parts of the business. You didn't really see a lot of progress on them in the quarter. And then on the call Elon increased CapEx guidance for this year from about billion to plus billion So that going to depress free cash flow even further So that stock getting hit on its report Away from tech on the earnings front industrial reports out last night in the US, including United Rentals, URI, were very strong. And then in Europe, you had a bunch of names trading up on earnings, including L'Oreal, Nestle, Roche, Sanofi, and a few others. With regards to Iran, I did not see any real major developments out overnight. It's kind of still the same story. Still a standoff on both sides. Iran is not agreeing to a face-to-face meeting given the ongoing US blockade. It does seem like there has been a lot of progress though on the kind of the key point. So to the extent there is a face-to-face meeting, it seems like a deal could be struck pretty quickly. I would imagine you could see both Iran and the US kind of suspend their blockades temporarily, briefly to allow that meeting to take place. You know, my view on Iran is I think the market largely assumes it will be a resolution and it's going to trigger a sell the news type of a reaction. I think anticipation is acting as an upside catalyst at this point. And so to the extent we do get a meeting, we do get a resolution, there is a final agreement, I think that going to kind of spur a sell the news response Because again we already rallied meaningfully off the lows in the last couple of weeks And I think at this point in time the market assumes there will be some type of a resolution or at least no more escalation. And there still is going to be a big fallout. Even if everything were to end today, there's going to be a substantial fallout, a stack-flationary fallout. We got the flash PMIs for Europe this morning out of April, and they were disappointing on growth and you saw a big spike in inflation. The U.S. is going to probably see similar dynamics, not to the same extent. Europe is more exposed. But this is going to have significant sacrilegationary implications for at least the next several months, if not longer. Those are all the main highlights on the news front for the calendar today. In terms of scheduled news, the focus will be on earnings, so before the open. American Airlines, American Express, Blackstone, Comcast, Dow Chemical, Honeywell, Dr. Pepper, Lockheed Martin, Pulte Homes, Union Pacific are the big highlights. US flash PMIs for April at 9.45 a.m. There'll be another round of Israel-Lebanon peace talks today in the U.S. Those are important because that ceasefire does factor into the U.S.-Iran relationship. and then earnings after the U.S. close. Intel and SAP are going to be the big highlights there. And that is everything for today, Thursday, April 23rd. Thank you, everyone, for listening.