Good morning, {$esp_first_name|default:Trader}.
State of the Market drops today and the desk is loaded.
The news links cover Moderna ripping on a hantavirus headline, the S&P making record highs while half the index breaks down, and China slamming the brakes on Saudi crude imports. That is the backdrop.
Below are loves and hates from each trader:
Hans loves the cybersecurity name that just ripped 20 percent on a $1.8 billion AI cloud deal. His hate is the mega-cap tech ETF that everyone owns and nobody is checking the breadth underneath.
Andrew loves the small modular nuclear name the Energy Secretary basically promised DOE loans to last week. His hate is the industrial conglomerate that beat earnings and still cannot get out of its own way thanks to legal overhang.
Licia loves the oil supermajor up over 20 percent year-to-date that catches a bid on every Iran headline. Her hate is the AI chip name up 100 percent in a year with earnings around the corner and a chart she does not trust.
Mark loves the aerospace name whose earnings beat got punished by the market anyway. His hate is the meme-stock-turned-bitcoin-treasury that just bid $55.5 billion for an e-commerce dinosaur.
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The Daily News Breakdown
SNEAKER: Moderna rips on a cruise ship outbreak nobody saw coming. Moderna (MRNA) popped 8 percent in premarket Monday after ripping 12 percent on Friday. The catalyst: hantavirus. The biotech is researching vaccines against the virus alongside the U.S. Army Medical Research Institute and Korea University, and a cluster of cases tied to the Dutch cruise ship MV Hondius just turned that quiet research line into a headline. Three deaths, multiple Americans evacuated, one passenger testing positive for the Andes strain. There is no approved hantavirus vaccine anywhere, which makes Moderna's early-stage work the only game in town. Throw in reports Trump may push out FDA commissioner Marty Makary, and biotech volatility just got a green light.
SIREN: The S&P keeps making highs while the average stock breaks down. The S&P 500 closed Friday 7.7 percent above its 50-day moving average, but only 52 percent of its members were above their own 50-day. BTIG's Jonathan Krinsky points out that in the past 30 years, the index has never been this stretched with fewer than 55 percent of components participating. Friday was also one of three times since 1990 the S&P hit a new high with more new lows than new highs. That is the textbook definition of a narrow rally. The mega-cap names are doing the heavy lifting (think the Magnificent Seven names like Nvidia and AMD) while everything else quietly rolls over. Narrow rallies do not always break, but when they do, they break hard.
SIGN: Saudi Arabia's biggest oil customer just slammed the brakes. China is set to take just 10 million barrels of Saudi crude in June, or roughly 333,000 barrels per day. The normal pace is 1.39 million per day. That is a record low, driven by Chinese refiners like Sinopec and Rongsheng cutting their orders because Saudi prices stayed too high. Aramco only knocked $4 off the June Arab Light official selling price after setting a record premium last month, and Beijing wanted a bigger discount. Crude exports from Saudi have plunged across the board since the Hormuz war started February 28, forcing the kingdom to reroute barrels through the East-West Pipeline to the Red Sea port of Yanbu. When the world's biggest oil buyer pulls back this hard, demand destruction is no longer theoretical.
What You Missed Friday
Andrew hosted State of the Market for Mark this morning and laid out the three things actually moving stocks: tariffs, CapEx, and jobs. The federal court just struck down Trump's second layer of tariffs, and nobody knows what that means yet for refunds or the Treasury. Andrew’s bigger point: 2025 was the year of the tariff, and every panic sell-off below SPY 600 was an opportunity. SPY now trades 736. The pattern keeps repeating, and the people who scared themselves out of the market keep missing it.
The second story is hyperscaler capital spending. Andrew kicked it to Hans, who walked through why this is not the 1990s. Inference (putting AI to actual work, not just training it) is way more compute-heavy than training, and Google literally said its cloud numbers would be better if it had more capacity. That is insatiable demand. Hans cited Jevons paradox: cheaper AI does not mean less demand, it means more. Same way the internet was supposed to kill travel agencies and instead exploded them.
The flip side is software. Hans called it "uninvestable" right now, not because the companies are dying, but because you cannot look five years out and confidently say where Salesforce (CRM) or Adobe (ADBE) lands. Every time Anthropic opens its mouth, six more verticals get a credible threat. Microsoft (MSFT) sits at the top of that list because they own the operating system layer, Copilot is mid, and they do not have their own chip. Apple and Google are the safer bets: Apple because AI is moving toward them and people will not stop buying iPhones, Google because YouTube and TPUs print money no matter what.
Jobs came in better than expected. The AI-is-going-to-kill-jobs narrative is not playing out yet. Watch the next six to eight months for actual enterprise migration off the legacy software names.