Morning Report | Hormuz deal chatter sinks crude, lifts duration bid
$TLT duration bid on de-escalation $AMD AI guidance bar rises $PLTR software demand re-rate $LLY healthcare earnings upside $EWG Rhine drought supply-chain friction
Market Pulse
U.S. Earnings
7 events
Earnings split by sector with healthcare and consumer discretionary upside, while digital ads and quick-service execution introduce pockets of near-term caution.
Latest Development
Eli Lilly beat expectations and lifted FY2026 revenue guidance to $85–$87B, citing sustained Mounjaro and Zepbound demand while absorbing about $3.03 per share of deal-related charges.
Lilly reported Mounjaro worldwide revenue up 91% to $9.94B and Zepbound U.S. revenue $4.93B, with lower realized prices but management pointing to accelerating volumes; oral obesity pill Foundayo posted $98M sales.
CVS delivered Q2 sales of $106.10B and adjusted EPS $2.58, then raised FY2026 adjusted EPS to $7.90–$8.10 and revenue outlook to at least $414B as Insurance and Retail Pharmacy improved.
CVS’s Aetna medical benefit ratio improved to 87.4% from 89.9% year over year; Insurance segment revenue was $37.54B and medical membership was about 26M, roughly flat versus the prior quarter.
Disney posted fiscal Q3 adjusted EPS $2.06 on roughly 7% revenue growth to about $25.2B, with Experiences revenue up 10% to $9.97B and streaming revenue up 11% to $5.53B.
Disney sold its 50% stake in A+E to Hearst for about $1.2B cash and raised its FY2026 buyback target to at least $9B, while highlighting domestic park strength and theatrical momentum.
Wayfair reported Q2 revenue $3.52B with U.S. sales up 8.7% to $3.1B and free cash flow $301M, guiding for high single-digit Q3 revenue growth and 29.5%–30.5% gross margin.
Market reaction
Premarket movers were constructive in large-cap healthcare and media: LLY rose more than 5%, DIS gained about 4%, and CVS added around 1%; W jumped roughly 30% after its report, while PINS fell about 7% after hours on Q3 guide factors.
Our view
A selective risk-on tape within earnings, led by raised outlooks and resilient demand in healthcare and experiences, with weaker pockets treated as stock-specific. Key monitor is whether guidance commentary continues to offset cost and demand-timing headwinds, particularly across ad-driven and value-sensitive consumer names.
What could change our view
Broader evidence that medical-cost trends reaccelerate and pressure managed-care profitability.
Ad demand and consumer traffic weaken beyond transitory timing and execution issues.
Tickers: $LLY, $CVS, $DIS, $W
AI
3 events
AI trade splits as software re-rates on demand while semis and AI infrastructure face higher bars on guidance and capex.
Latest Development
AMD reported Q2 revenue of $11.54B (+50% YoY) with Data Center revenue $6.7B (+107%); it guided Q3 revenue to about $13.0B ±$0.3B, above consensus.
Palantir posted Q2 revenue of $1.94B (+93% YoY) led by commercial +149% and government +90%, and raised FY revenue guidance to $8.15B–$8.158B with commercial revenue >$3.424B.
SpaceX reported Q2 revenue of $7.8B (+92% YoY) alongside a ~$541M quarterly net loss; Q2 capex jumped to ~$18.3–$18.4B with reporting indicating roughly $16B was AI-related and elevated spending for at least two more quarters.
Market reaction
PLTR surged ~29.5% and stayed higher premarket, while AMD fell ~8%–9% in extended/premarket trade; SpaceX dropped ~7.5% after-hours and ~12% premarket after capex and loss focus.
Our view
Expect continued dispersion within AI, with investors rewarding clearer near-term revenue conversion and penalizing outcomes that miss elevated expectations or extend cash-burn narratives. Key monitor is whether AI spend translates into accelerating, profitable revenue over the next two quarters and whether upcoming guidance updates reduce uncertainty around ramps and payback.
What could change our view
Evidence that AI capex payback is faster than feared, reversing the capex skepticism.
Guidance and shipment execution outperforms elevated expectations, re-rating hardware momentum.
Tickers: $AMD, $PLTR, $TSLA
Macro & Policy Digest
Hormuz deal chatter drives a de-escalation trade with oil sliding and U.S. duration bid, while timing signals from officials keep volatility elevated.
Latest Development
Treasury Secretary Bessent said a Hormuz-opening deal could come “today or tomorrow,” Trump echoed near-term timing but warned military action if talks fail, and CENTCOM said the strait’s southern route remains open after 1,000+ assisted transits.
Market reaction
On Aug 4, WTI fell 5.69% to $75.77 and Brent fell 5.26% to $79.36; early Aug 5 both retraced modestly (WTI ~$76.2–$76.3, Brent ~$80.2–$80.4). UST yields moved lower with 10Y down >6 bps to ~4.619% (early Aug 5 ~4.6086%), 30Y ~5.182% (early ~5.1617%), and 2Y ~4.198% (early ~4.2061%).
Our view
Continued pricing of reduced Hormuz disruption risk, keeping crude capped and supporting a modest duration bid (TLT) as energy-inflation fears ease. Monitor for confirmation of an actual maritime deal and any shift from negotiation signals to explicit escalation steps.
What could change our view
Talks fail and U.S. military action becomes imminent, reviving disruption risk.
Evidence of impaired shipping flows despite official “open route” messaging.
Tickers: $TLT
Oil risk premium rebuilds after Houthi missile-attack claim near Saudi Yanbu, keeping traders focused on Red Sea shipping and export infrastructure.
Latest Development
• Iran-aligned Houthis said they fired a missile at a Saudi oil tanker off Yanbu; Saudi officials had not commented, leaving verification uncertainty and sustaining a Red Sea/Arabian Sea shipping-lane risk premium.
Market reaction
Oil rebounded intraday with Brent up $1.51 (+1.9%) to $80.87/bbl and WTI up $0.90 (+1.19%) to $76.67, after Brent fell about 5% the prior session and closed below $80.
Our view
Crude holds an elevated geopolitical premium without a confirmed supply outage, with Brent defended around $80 and WTI in the mid-$70s. Key monitor is official confirmation or follow-on attacks around Yanbu or shipping routes that force higher freight/insurance versus a renewed de-escalation narrative.
What could change our view
Saudi confirmation of damage or outages at Yanbu materially tightening supply.
Ceasefire or strait-opening progress revives de-escalation trade and compresses risk premium.
Tickers: $CL=F
European drought strains Rhine shipping and Danube cooling, lifting supply-chain friction and power-supply risk across the region.
Latest Development
Romania reportedly shut its Danube-cooled Cernavoda reactor amid low water and used controlled underwater detonations to improve flow; Rhine’s Kaub gauge fell to 24 cm vs 78 cm “critical,” while Paks and Serbian hydropower faced constraints.
Our view
Persistent low-water conditions keep a mild macro drag on Europe via higher inland freight costs and elevated regional power-supply risk, with Germany most exposed through Rhine logistics. Watch Kaub gauge levels and any further nuclear/hydropower curtailments that force electricity imports or prompt broader industrial disruptions.
What could change our view
Water levels recover quickly, easing Rhine freight surcharges and cooling constraints.
Further Danube/Rhine declines cause additional nuclear outages and broader transport bottlenecks.
Tickers: $EWG
U.S. missile and interceptor stockpiles reportedly depleted after Iran war, keeping focus on multiyear replenishment and a potential procurement upshift.
Latest Development
CBS/Reuters report near-total ATACMS and Precision Strike Missile use in the Iran war; CSIS estimates Patriot down to ~759–827 from ~2,330 and THAAD ~234–278 from 452, as Pentagon seeks sharply higher FY2027 procurement for key munitions.
Our view
The depletion narrative underpins a constructive bias for ITA and major defense primes as procurement requests skew sharply higher for missiles and interceptors. Next to watch is whether FY2027 appropriations convert the Pentagon’s request into funded multi-year contracts, given cited 3.5–5 year delivery cycles.
What could change our view
Appropriations fail to fund requested FY2027 procurement increases.
Inventory estimates revised materially higher, easing perceived replenishment urgency.
Tickers: $ITA
Texas orders audit of data-center interconnections, effectively pausing ERCOT large-load queue and delaying Batch Zero planning as AI power demand collides with grid constraints.
Latest Development
- Gov. Abbott directed PUCT and ERCOT to audit pending data-center interconnections and deny noncompliant requests; ERCOT said this effectively pauses projects, with ~474 GW in review (~90% data centers) and Batch Zero transmission planning postponed.
Our view
The directive extends timelines and increases gating risk for ERCOT data-center load additions, tempering near-term AI-driven power demand certainty in Texas-linked exposures. Monitor PUCT/ERCOT implementation details, especially audit criteria and any signal on when Batch Zero planning restarts.
What could change our view
PUCT/ERCOT rapidly complete the audit and resume processing interconnection requests.
Audit results in broad denials that shrink expected large-load additions in ERCOT.
Tickers: $VST
Company Events
Paramount’s roughly $111B bid for Warner Bros. Discovery hits a long antitrust path with trial set for March 2, 2027.
Latest Development
A federal judge in Northern California set a March 2, 2027 trial in a 12-state AG antitrust suit, delaying Paramount’s Warner Bros. Discovery deal closing until at least June 2027.
Our view
The transaction remains on ice and will trade as low-visibility regulatory optionality rather than a near-term closing. The key monitor is whether the parties pursue a litigation-driven path through the March 2027 trial schedule or shift to remedies/structural changes to clear Section 7 concerns.
What could change our view
Earlier settlement or court action accelerates the timeline versus June 2027.
Deal terms change materially in response to state AG competition objections.
Tickers: $WBD
Lucid delays midsize EV to most likely 2H 2027 as an operational reset begins, with robotaxi milestones shifted to Gravity-based units.
Latest Development
Lucid moved its midsize EV launch to “most likely” 2H 2027, kept 2026 guidance unreinstated, expects ~100 preproduction Gravity robotaxi units by end-2026 and non-prototype production early 2027, and cut its Arizona plant to one shift.
Market reaction
LCID shares fell about 8% after hours following the update.
Our view
This read-through is near-term negative for LCID as product and production timing extend while the company manages output and inventory. Next key monitor is execution against the stated robotaxi delivery and early-2027 production milestones alongside any refreshed guidance framework.
What could change our view
Robotaxi timeline slips beyond end-2026 deliveries or early-2027 non-prototype production.
Further production reductions or a weaker delivery trajectory undermines operational reset credibility.
Tickers: $LCID
GM extends SAIC-GM China JV to 2047, pairing Buick/Cadillac reboot with China-built export push into non-U.S. markets.
Latest Development
• GM and SAIC extended their 50/50 China JV by 20 years to 2047, targeting Buick/Cadillac sales recovery and non-U.S. exports of China-built models; no financial terms or capital commitments were disclosed.
Our view
The JV extension keeps GM structurally committed to China while it attempts to stabilize local performance and build a non-U.S. export channel, leaving near-term valuation sensitivity to China execution. Monitor for disclosure of capital needs, profit-sharing/dividend mechanics, and evidence that Buick/Cadillac volume and margins improve versus recent loss years.
What could change our view
JV terms imply large cash calls or reduced profit-sharing/dividends for GM.
China demand or policy/geopolitical constraints prevent sustained turnaround in Buick/Cadillac profitability.
Tickers: $GM
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Informational only; not investment advice. Sources deemed reliable.