Two stories driving the week
The week ran on two tracks at once. From Wednesday afternoon on, it was all about earnings. Running alongside it, the Middle East pushed oil higher and yields higher, which pressured gold and Bitcoin while the dollar climbed.
Today brought a small break from both moves. Equity futures were weak all week, with a light bounce this morning. Stocks closed off their lows the day before, but the NASDAQ sat at least 150 points higher last night than where it opened, so the open looked like it was sputtering. Treasuries bounced back (yields lower), and crude oil moved lower.
On the energy side, one big worry was the Red Sea turning into a second choke point after Houthi threats and attacks on Saudi tankers there. Updates showed exports still flowing through the area despite the threats, which reads as a positive. The Strait of Hormuz stays effectively closed, but that was already the baseline coming in.
The inflation picture separates this flare-up from the last one. In January and February, when the conflict first hit, breakevens on the 5- and 10-year moved higher, signaling real inflation fear. This time that has not happened. Nominal rates rose, but the market's read on real rates and inflation 5 to 10 years out stayed calm. Part of that traces to a belief that the new Fed team under Warsh will be more hawkish, which could mean higher rates sooner without needing to go much higher. So it may not be peak rates, but it is close. If oil and rates both keep rising, that drags on the economy - the cure for high prices is high prices, since high prices choke off demand.
Inflation showed up in earnings too. Albertsons sold off after saying inflation still weighs on the grocery shopper.
Intel
Intel was modestly higher, up about $3 from the prior close after initially spiking as much as $14 a share and looking like a true winner. That tone contrasts with the day before, when Alphabet and Tesla dragged the market down and Tesla posted its worst day in over a year, with heavy pressure across tech.
The results were strong: 25% revenue growth, earnings at double the expectation, and expanding margins. Data center and AI revenue grew almost 60% year-over-year, easily beating estimates. What the street clung to was current-quarter guidance for Q3 of $15.8 to $16.8 billion, well above the $15.1 billion midpoint estimate. The turnaround and refocus plan is finally showing up.
JP Morgan stays a doubter at underweight, but even they said results and guidance beat expectations by a wide margin, the 14A road map remains on track, and supply constraints persist. The open question now is whether the rally holds - early strength faded to only about 2% up, which puts some caution back in. Intel is up nearly 172% this year before today's move.
Deckers
Deckers needed an upside catalyst and did not get the reaction it wanted. The stock is down about 7% this year, still faring better than Nike or Lululemon, and has pulled back roughly 24% from its highs. It is now essentially a two-brand company: about half of revenue from UGG, half from Hoka.
The report showed modest growth and modest margin expansion. Hoka grew 7.7% year-over-year and Ugg almost 5%, so both main segments are still growing. But expectations were already set for that, so call it in line. Guidance moved up marginally, by 5 cents on both the low and high end for EPS, while revenue guidance was held flat. The key concern: that EPS midpoint came in a touch below analyst expectations, and the unchanged revenue outlook left the story fully understood. A support level near 94 lines up with where the stock opened, so that level is the one to watch.
Retail has been hard to read this cycle. A low bar is not enough on its own to make a name an earnings winner.
American Express
American Express is usually seen as a winner of the "K-shaped" economy, capturing the higher end. Capital One, at the other end, said it sees no K-shaped economy - though it may simply not be positioned to see it. A point worth adding: the lower end of the K is not being extended credit at all, so the truly struggling are not getting cards, and beyond that they are just not spending.
Amex revenue came in weaker than expected, with net card fees soft, but it beat on EPS. Provisions for card losses were light at $1.1 billion versus near $1.4 billion, down 21% year-over-year - not as dramatic an adjustment as Capital One's, but still decent. On the call, management flagged the Platinum card as the fastest-growing part of its US consumer business, pointing to more cardholders ahead.
Verizon
Verizon traded slightly lower after being higher early, in very modest moves, despite a revenue miss. Investors leaned on subscribers, margins, and free cash flow instead. Free cash flow was $6.4 billion, up 24%. Post-paid net phone additions were 184,000, and broadband additions rose 12.3%. The company beat on adjusted EPS and raised its EPS outlook to $4.99-$5.04 from $4.95-$4.99, about a nickel higher. It reaffirmed capex of $16 to $16.5 billion for network buildouts.
The weak spot was operating revenue landing slightly below estimates - decent growth trends are not translating fully into revenue. Volatility should stay contained, though the stock is very rate-sensitive, so moving rates could push it around.
Earlier in the week, AT&T had one of its worst days in over a year on its own earnings. Verizon, now trying to position as an AI-exposed name, is up about 7.6% this year before today, outperforming both T-Mobile and AT&T by a wide margin.
