Sam Badawi
THE PAIN TRADE IS UP | HIDDEN EDGE
6/25/2025, 6:38:38 AM
Economic Summary
- Major U.S. indices are trading near all-time highs after a strong rebound since early April; market action reflects improved sentiment after tariff pivots and less-than-expected Middle East escalation, with retail-driven momentum and short-covering amplifying rallies.
- Interest-rate dynamics remain central: higher rates have constrained consumer strength (consumer confidence missed at 93 vs. 99), but expectations of future rate cuts are priced into tech and consumer discretionary upside (Tesla, Amazon, Apple).
- Corporate-specific macro tailwind: Carnival (CCL) benefits from $8.5B in customer deposits (float) and targeted refinancing, materially lowering borrowing costs and boosting near-term free cash flow and margins.
- AI/data-center capex is a major demand driver: NVIDIA's NVLink Fusion broadens its ecosystem and could raise demand for partners (e.g., Marvell MRVL), implying re-rating potential for networking and custom-silicon suppliers.
Bullish
- Carnival (CCL) accelerating debt paydown, large customer deposits (float) boost margins and credit rating.
- NVIDIA ecosystem expansion (NVDA) via NVLink Fusion keeps customers inside its stack, broadening TAM.
- Marvell (MRVL) potential design wins with XAI and Oracle could materially reaccelerate data-center revenue.
- Rate cuts would likely drive broad rallies in consumer discretionary and mega-cap tech (e.g., TSLA, AMZN).
Bearish
- HIMSS faces regulatory/legal uncertainty from its Novo Nordisk split, risking large downside on headline investigations.
- Micron (MU) and other semiconductors have already run hard; expensive options reduce upside reward-to-risk.
- Consumer weakness at the lower end and a disappointing consumer confidence print (93 vs 99) could pressure discretionary names.
- High interest rates and mortgage costs make housing unaffordable for many, limiting consumer spending and mobility.
Bullish tickers
CCLNVDAMRVLAAPLTSLAAMZNNUGTLB
Bearish tickers
HIMSSMUUSONCLH
CCL
Bullish
Large float, rapid debt paydown, margin improvement, and upgraded credit profile support earnings and valuation.
Bearish
Vulnerable to recessionary consumer weakness and travel cutbacks if macro deteriorates.
NCLH
Bullish
If rates fall, growth-oriented strategy could look attractive due to capacity-driven revenue upside.
Bearish
Chose growth and fleet expansion over aggressive debt reduction, leaving it more exposed to rates.
USO
Bullish
Bought as a short-covering trade earlier in the Middle East escalation; energy can spike on geopolitical risk.
Bearish
Oil ETF exposed to violent swings; short-covering and rapid draws can hurt longs.
MRVL
1 price targets
100
Bullish
Speculated design wins with XAI and Oracle and NVLink compatibility could reaccelerate data-center revenue and re-rate the stock.
Bearish
Recent earnings disappointed some expectations; growth may slow absent confirmed new customer wins.
NVDA
Bullish
NVLink Fusion expands ecosystem, keeping customers in NVIDIA's stack and supporting long-term platform dominance.
Bearish
Extremely high expectations; any execution or demand miss could cause outsized drawdowns.
TSLA
Bullish
Robo-taxi and FSD progress plus large consumer/momentum positioning could drive new highs if execution holds.
Bearish
FSD and regulatory hurdles, plus lofty momentum valuations, pose downside risks.
AMZN
Bullish
Large exposure to AI/data-center demand and consumer resilience supports upside under easing rates.
Bearish
High multiples and macro-driven consumer weakness could slow growth in core retail segments.
AAPL
Bullish
Potential Perplexity acquisition and AI initiatives could materially improve iOS ecosystem positioning and growth prospects.
Bearish
AI relevance not guaranteed; acquisition rumors (Perplexity) may be priced in already.
MU
Bullish
Strong memory demand from GPUs and data-center buildouts underpins substantial revenue upside over time.
Bearish
Stock already ran hard; buying now risks choppy returns and expensive option premiums.
NU
1 price targets
18
Bullish
Morgan Stanley reiterated NU as a top pick; penetration of payroll loans in Brazil could drive share gains.
Bearish
Brazil macro and rate-stickiness could slow loan penetration and profitability assumptions.
GTLB
Bullish
Software company growing ~25%; viewed as attractive value in software with room to recover from earnings pullback.
Bearish
Post-earnings pullbacks increase near-term volatility risk for discretionary buyers.
HIMSS
Bullish
Historic beat last quarter, but future upside depends on resolution of partnership and regulatory issues.
Bearish
Partnership breakup with Novo Nordisk and potential FDA or legal scrutiny could crater the stock.
NVO
Bullish
Novo Nordisk may monetize assets or restructure partnerships for margin improvement.
Bearish
Strategic motives for splitting partnerships could create short-term disruption for partners.
ANET
Bullish
Network infrastructure demand from AI/data-center buildouts supports secular growth opportunities.
Bearish
Competition and cyclicality in networking capex could pressure results.
MSFT
Bullish
Strong AI positioning and cloud strength contribute to sector leadership and ETF-driven flows.
Bearish
High expectations priced into mega-cap results may lead to volatility on any disappointment.
People mentioned
Donald TrumpJerome PowellAndrew DunhamLizanne SaundersJensen HuangChrisPedroLeandroRajTylerWarren Buffett