Sam Badawi
Is Ex-US Taking the Gains? | HE 27 [Patreon Exclusive]
3/6/2025, 10:34:47 PM
Economic Summary
- Walmart (WMT) reported weak guidance, acting as a bellwether for consumer demand and contributing to the market pullback, suggesting consumer softness may weigh on retail-exposed sectors.
- Renewed COVID concerns out of China increased risk-off flows, pressuring travel and China-exposed names (e.g., BABA, FXI) and amplifying short-term market volatility.
- Options expirations (weekly/monthly OPEX) often increase end-of-week volatility; the recent OPEX coincided with earnings and news, magnifying market moves.
- Higher 10-year yields are a constraint on the housing market; speakers noted a need for the 10-year to fall toward roughly 2.25% to materially unlock refinancing and housing activity, which would also ease debt-refinancing costs.
- Emerging-market FX effects materially distorted reported results: Nubank (NU) faced ~20–25% BRL devaluation year-over-year, creating headline revenue and EPS misses despite strong underlying FX-neutral growth.
- Mixed datapoints on cloud/data-center spending (MSFT slowdown signal) may be company-specific; broader AI infrastructure demand argument remains bullish for vendors like NVDA.
Bullish
- AI cycle still early; long runway for NVDA and mega-cap AI beneficiaries.
- Google Cloud (GOOGL) gaining share and may be undervalued relative to growth.
- Nubank (NU) shows strong user/product growth and improving credit metrics.
- Crown Castle (CCI) is an attractive dividend/defensive play if yields fall.
- Cruise lines (NCLH, RCL, CCL) likely to recover after transient COVID headlines.
- Verizon (VZ) and other essential-communications firms act as defensive plays.
Bearish
- Weak Walmart guidance signaled consumer softness and triggered a market sell-off.
- China COVID resurgence created risk-off sentiment and short-term travel/consumer pressure.
- Microsoft datapoint of slowing data-center spend may signal cloud capex deceleration.
- Nubank (NU) headline miss driven by BRL devaluation and FX headwinds.
- Options expirations (OPEX) amplified late-week volatility and downside moves.
Bullish tickers
NVDAGOOGLNUCCINCLHRCLCCLVZ
Bearish tickers
WMTMSFTNUBABAFXI
WMT
Bullish
None highlighted in the transcript besides its role as a consumer bellwether.
Bearish
Weak guidance seen as sign of consumer softness and contributed to market sell-off.
HD
Bullish
Home Depot (HD) guidance historically moves markets when housing is strong.
Bearish
No direct bearish case discussed; Home Depot guidance will be watched as a housing indicator.
LOW
Bullish
Seen as less market-moving than Home Depot on housing data.
Bearish
Not a major focus; noted that Lowe's reports after Home Depot.
MSFT
Bullish
The transcript argued the datapoint may be Microsoft-specific and not indicative of broad demand weakness.
Bearish
TD Cowen note on slowing data-center spend raised concerns about cloud capex deceleration.
NVDA
Bullish
AI cycle early; NVDA benefits from continued AI infrastructure demand and long runway.
Bearish
Not directly bearish in the episode; some caution around AI valuation was mentioned.
CRWD
Bullish
Cybersecurity demand rising due to expanding software/data footprint supports growth.
Bearish
No bearish argument given.
PANW
Bullish
Rising cybersecurity needs make Palo Alto attractive as enterprise spending grows.
Bearish
No bearish argument given.
GOOGL
Bullish
Google Cloud (GCP) and owned infrastructure allow competitive pricing and faster adoption by startups.
Bearish
No specific bearish case in the transcript.
NU
3 price targets
142025
Bullish
Strong user growth, product penetration, improving NPLs and Mexico expansion support long-term earnings power.
Bearish
Reported headline revenue and EPS missed due to BRL devaluation (~20–25%), creating FX-driven downside in USD reporting.
CCI
3 price targets
120160170
Bullish
Cell-tower REIT with stable contracts and dividend; could rally to ~$120 (or higher if rates fall).
Bearish
Near-term debt maturities could pressure the company if rates stay elevated.
TLT
Bullish
Used as a hedge if 10-year yields decline; pays monthly income.
Bearish
Long-duration bond ETF can fall when yields rise; newer maturities may reduce effectiveness.
VZ
Bullish
Defensive, essential service; benefits from being a stable safety stock in volatility.
Bearish
No bearish case raised.
SMCI
Bullish
Mentioned as up overnight; benefits from server/AI hardware demand.
Bearish
No bearish case discussed.
NCLH
Bullish
Cruise lines expected to recover; COVID headlines seen as transient.
Bearish
Short-term pressure from China/COVID travel fears.
RCL
Bullish
Viewed as recoverable and cyclical upside once fears fade.
Bearish
Subject to short-term travel/COVID risk-off moves.
CCL
Bullish
Expected recovery with easing COVID concerns in travel.
Bearish
Short-term volatility from travel and China-related headlines.
BABA
Bullish
No specific bullish case in episode beyond China/US divergence discussion.
Bearish
China macro/COVID fears weigh on Chinese ADRs like BABA.
FXI
Bullish
FXI and China exposure rallied recently; sentiment can swing vs US markets.
Bearish
China risk-off can pressure FXI and related exposure.
People mentioned
Donald TrumpElon MuskScott BesantBrian FeroldiDavid VelezRajEasy Lightweight