Cover:
-Target, a renowned retailer, is facing challenges such as a lack of merchandise, a lack of staff, messy stores, and poor diversity, equity, and inclusion policies. These issues have left the company in a precarious position in the competitive US retail market, dominated by well-capitalized giants like Walmart, Costco, and Amazon. Target's stock has dropped 43% over the past three years. The company is taking steps to turn its business around, including spending billions on remodeling and opening stores, improving its supply chain and technology, partnering with brands like Kate Spade and Champion, and cutting prices on thousands of items. However, Target needs to refresh its stores, invest in e-commerce, and repair its tarnished brand to attract shoppers back. Without drastic action, Target could become the melting ice cube, paying a chunky dividend as it follows retailers like Kohl's and Kmart.
Interview:
-no update
Tech Trader:
-Nvidia, the world's second-most valuable company, briefly became the most valuable company in the world on Thursday, just behind Microsoft. The company reported solid fiscal first-quarter results and gave a better-than-feared revenue outlook for the current quarter. However, Nvidia managed to handle the loss of a massive business line and generated impressive growth. Revenue for the April quarter was up 69% year-over-year to $44.1B, ahead of expectations. Nvidia's data-center business, primarily driven by AI chip demand, grew even faster, up 73% from last year to $39.1B. However, Nvidia's guidance was mixed, with a revenue forecast range with a midpoint of $45B, below analysts' consensus of $45.9B. The cause of the miss is largely outside of Nvidia's control, stemming from President Donald Trump's decision to ban sales of the company's H20 chips to China. Nvidia's gains accelerated in after-hours trading, and the market is forward-looking, with China headwinds largely de-risked, with an outlook reset for potential upside going forward.
The Trader:
-Palantir Technologies, a mid-cap stock, has seen a significant increase in price and value over the past year, adding nearly $250B to its market value. However, analysts suggest that this meteoric rise, linked to the broader artificial-intelligence investment theme, could work against the stock in the coming weeks. Palantir joined the S&P 500 in the fall of last year and has more than tripled since then, with a market value just shy of $300B. Trivariate Research, led by Adam Parker, warns that Palantir's current 8% weight in the mid-cap universe poses an "extreme challenge for active managers" who may want to sell the stock but cannot fight against the support from passive managers who track benchmark indexes. As Palantir moves into the large-cap universe, large-cap managers likely will look more closely at its valuation, potentially triggering downward pressure on the stock. Trivariate deems Palantir's level of 73X earnings to be one of the most expensive stocks it has studied over the past 25 years, with an implied growth rate of over 40% a year for a decade. Palantir's 2024 revenue increased by 29%, with a bottom-line tally of $2.87B.
-DICK's SPORTING GOODS (Dick’s) has experienced a significant decline in its stock, falling 20% in 2025 due to tariffs and investor skepticism over its decision to buy struggling sneaker chain Foot Locker. Despite this, Dick's has a remarkable record of sales growth and is improving its online sales. The company's earnings report showed a 5.5% same-store sales growth rate in the first quarter, driven by a boost in the average customer purchase size. This bodes well for Dick's ability to navigate tariffs and other cost pressures. Dick's has confirmed its earnings guidance for the current fiscal year, which ends in January, and expects to widen its gross margins. Some analysts believe the stock deserves a higher valuation due to its consistent growth. Dick's now trades at 12X 2026 earnings, in line with its historical average. Morgan Stanley's Simeon Gutman thinks the stock should trade at 15.5X its expected 2026 earnings, which would lift it to $232, about 30% above its current level of around $180.
Features:
-Viking Holdings, known for its river cruises, has experienced a selloff despite a better-than-expected first quarter. Investors worry that bookings may be slowing due to economic uncertainty. The company's secondary offering, just over a year after its initial public offering, has further sparked concerns. However, the selloff seems like a buying opportunity, as Viking has the best-in-class balance sheet, return on invested capital, and capacity expansion. The company caters to an affluent and loyal customer base that books directly with the company. Despite the unsettled macro backdrop, Viking's management has been cautious, suggesting that booking rates may have slowed. Despite this, 92% of 2025 and 35% of 2026 capacity was already sold after a record "wave season." Pricing remains strong for cruises, particularly for Viking's upscale sailings.
-Inflation in the US is slowing but growth remains a concern for investors. The Bureau of Economic Analysis reported a 0.2% annual GDP shrink, which is still negative. The combination of slow growth and neutral inflation favors stocks of companies that pay and raise their dividends, according to a report by Ned Davis Research analysts Ed Clissold and Thanh Nguyen. During slow-growth, inflation-neutral periods, dividend growers posted average annual returns of 6.2%, while all dividend payers returned 4.4%. Companies that paid dividends, without raising them, posted annualized losses of 1.7%, and nonpayers posted average losses of more than 10%. The S&P 500's dividend stream has been healthy, with companies paying out $76.54 a share for the past 12 months ended in April. Financials stocks, followed by technology, healthcare, and consumer staples, make up the biggest share of the overall dividend stream.
Europe:
-Global investors are shifting their allocations between the US and Europe due to shifting tariff headlines and the administration's tax and spending policies. The EU official emphasized the uncertainty surrounding tariff statuses and the need for a stable, rules-based business environment in Europe. Europe's Stoxx 600, the region's broadest benchmark, has outperformed the S&P 500 by over 7.5% this year, despite having no megacap tech names and working against sclerotic economic growth. This is reversing a two-decade trend where European equities fell 60% relative to their U.S. peers. Bank of America's "Flow Show" report also notes that Europe-based funds drew in $1B over the past seven weeks, a larger portion of the Stoxx 600's $14T market cap than US funds.
Emerging Markets:
-no update
Commodities:
-The International Energy Agency predicts that the global shift to electric vehicles and renewable energy will increase copper demand by half, nickel more than twice, and lithium 11 times from 2020 to 2040. However, BHP Group and Rio Tinto, two industry giants, are experiencing a quarter drop in shares from their peak in early 2023. The sector's problems are cyclical and structural, with most of BHP and Rio Tinto's cash flow coming from iron ore. Iron ore prices have fallen by 20% in the past 18 months due to the ongoing real estate depression in China. Companies are scrambling to switch to copper, whose price has jumped 30% over the same period. Production costs for copper have tripled since 2010, as old orebodies mature and new prospects are more remote, harder to develop, or water-starved. The industry is too Balkanized to meet green transition demand, with BHP and Rio being the only companies big enough to pursue a $10B greenfield on their own.
Streetwise:
-CoreWeave, a tech company, began trading in March, marking the biggest initial public offering for a tech company in four years. The deal was supposed to be priced at $47 to $55 a share, but the tech-heavy NASDAQ had sold off 10% year to date. Nvidia stepped in to buy shares at $40, and they could still be had for $41 at the end of April. Now, CoreWeave's shares are $120, putting analysts in an awkward position. The company was founded in 2016 by energy traders who bought a graphics processing unit and used it for mining for cryptocurrency Ether. They changed the company name to CoreWeave while looking for new uses for their GPUs during downtime, including cloud AI computing. In late 2022, Microsoft-backed OpenAI published a blog note that trained a model called ChatGPT, leading Microsoft to turn to CoreWeave for AI computing. A frenzy of AI infrastructure investment has sent Nvidia stock more than 600% higher over the past three years.