Earnings Dramas & Calm Trends

A week where everything happened and nothing happened.

Narratives are dominating attention like never before.

Earnings beats rewarded.

Misses brutally punished.

Loads of noise around the macro, very little signal.

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Timeframes Shrink, Trends Rule

The market spent the last week going nowhere, proving once again that short-term noise is mostly just that.

Despite dramas over the weak NFP print & scattered volatility, the S&P is essentially flat.

Trend followers have little to fret over.

Day traders obsess over swings that barely register in the big picture.

Macro traders are melting down as micro dominates…

Micro > Macro (Goldman)

Earnings: Mixed Signals, Context Matters

Sharp post-earnings drops have caught attention.

The Trade Desk is down 30% in pre-market, despite a ‘beat’.

This overnight move has wiped out all of the past three months of gains.

Guidance disappointed, as it implies a much slower growth rate in upcoming quarters.

Microsoft’s post-beat dip is a little different.

In context, the long-term trend remains unbroken, and the earnings gap retrace could be a spot for patience to pay…

Short-term price action after results is often noise, and taking a business-owner perspective outperforms crowd jitters.

Regime Change Incoming: Faster Cuts the Risk

Trump’s push for early rate cuts looks prescient.

The policy lag is longer than consensus. Think years, not quarters, for monetary policy’s impact on the real economy (but markets won’t wait around).

Goldman notes US growth is stalling as inflation surprises plummet….

The stage is set for faster-than-expected cuts, with a political tailwind and the end of the Powell era in sight.

Expect volatility as markets digest the next phase: the real opportunity surfaces not in the first move, but as rates start flowing through corporate balance sheets.

Debt-Heavy Winners: Where to Hunt Next

When rates fall, our focus shifts to large caps with substantial debt piles and robust revenues.

Names that are able to monetise margin expansion from falling interest costs.

GoDaddy stands as a model: hedged debt, stable margins, and institutional certainty.

The coming weeks should be spent surfacing high-quality, high-debt companies poised to benefit most from falling yields.

Ignore speculative small caps. Large institutions can only deploy size in big, liquid names, making the top 10-15 S&P stocks both the focus and the benchmark.

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Stock Picking: Quality Over Hope

Most volatility around earnings is sector-based or a function of sentiment.

Standout yesterday was Celsius, with their Alani Nu acquisition already paying dividends, as the brand continues to gain market share.

Cyber is getting whacked as stocks like Fortinet, Palo Alto & CrowdStrike fall.

Sector bulls are licking their lips. As long-run tech adoption grows, cybersec will grow too.

For now though, profitability concerns & consolidations dominate the theme.

Homebuilders and other rate-sensitive groups trade on macro headlines, but sustained trends require multiple confirmations.

The ‘rates down’ bounce in XHB is looking shaky.

Positioning Pulse: Stick With the Big Fish

Real money, like pensions, sovereigns, central banks, must pile into the largest, most liquid stocks, not small-cap moonshots.

The composition of the S&P 500 means “passive” investing is basically a heavily concentrated bet on the top 8-15 names.

That’s where forced buying happens, and that’s where sustainable outperformance lives.

Craft watchlists ahead of regime change, but don’t get caught front-running before market signals confirm.

Outlook & Wrap Up

Churn, chop, and micro-drama aside, the bar for shorting this market remains sky-high.

Focus on trend, capital flows, and quality balance sheets as rate cuts approach.

Macro rotation and debt sensitivity are the next big trades but patience and selectivity win the cycle.

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