Markets Overview — Index Performance & Market Tone

• Citi warns global stock markets are at their frothiest since the global financial crisis, but advises dip buyers shouldn't bail just yet — citing structural supports underneath elevated valuations.

• Indexes continue grinding new highs after an extended rally since late March, with AI themes hitting extremes while the rally broadens beyond tech. Bulls remain active but notably not euphoric.

• Bitcoin has slid 22.28% since MicroStrategy CEO Michael Saylor's last post, while stocks rally and gold shines over the past year — a classic rotation away from crypto risk.

• Microsoft (MSFT) held steady as AI chips sold off, down roughly 11% YTD but outperforming the semiconductor complex today. The divergence raises questions about whether software megacaps are the safer AI bet.

Earnings Reports

• Lululemon (LULU) guided FY2026 revenue to $11B–$11.15B and targeted Q2 EPS of $1.76–$1.81, signaling stabilization after a period investors described as "disarray." The question now is whether this marks a genuine turnaround.

• ABM Industries delivered a Non-GAAP EPS of $0.90, beating by $0.02, on revenue of $2.3B — a $90M surprise to the upside.

• G-III Apparel (GIII) posted a Non-GAAP EPS of -$0.20, beating estimates by $0.10, with revenue of $536M edging past expectations by $6.07M.

Fed & Economic Data

• New Fed Chair Kevin Warsh — appointed by President Trump at the start of 2026 — has shifted into a posture where rate cuts are "virtually impossible," a sharp reversal from market expectations at his nomination.

• The yield curve has normalized with the front end lower, but the driver remains unclear: genuine growth expectations or investors demanding higher compensation for risk.

• Job openings hit their highest since 2024 while hiring continues to sink — a low-hire, low-fire dynamic that complicates the rate cut outlook.

• US jobs report looms as a key labor market test amid cooling expectations.

• A Fed note flags "China Shock 2.0": the ongoing export surge differs meaningfully from the early 2000s wave in structure and impact.

Hot Sectors

• AI Infrastructure: Goldman Sachs projects Big Tech will spend $5.3 trillion on AI from 2025 to 2030 as Meta, Microsoft, Amazon, and Alphabet ramp buildout. The open question is when that spend translates to profits.

• AI Neocloud: IREN Limited (IREN) rallied 39.6% in May, fueled by Q3 earnings and momentum in AI infrastructure demand.

• Space Sector: SpaceX IPO launches next week with outsized retail interest. Quantinuum opened at $68/share in its debut. But not all launches stick — Intuitive Machines (LUNR) announced share dilution, and Virgin Galactic (SPCE) remains a WSB cautionary tale with bag-holders reporting cost bases near $1,100.

Stock News

• Berkshire Hathaway (BRK.A, BRK.B): Successor Greg Abel has overhauled the portfolio, concentrating 61% of assets in just 5 stocks — a striking departure from Buffett's historically broader diversification.

• Tesla (TSLA) has staged a powerful comeback to ~$420 after sliding for much of 2026, though questions about its 3-year trajectory persist.

• Amazon (AMZN) is being flagged as an overlooked AI winner, with a "$200 billion reason" tied to its infrastructure spending scale.

• Walmart (WMT) faces a valuation reality check as its tech-fueled premium meets the reality that low-margin grocery still dominates the business.

• Innio, a power generator for data centers, saw its IPO quietly outshine Quantinuum's debut — a signal that energy infrastructure may be the stealth winner of the AI buildout.

• Dillard's (DDS) is simplifying its capital structure through a merger with the family trust company.

Market Analysis — Key Themes & What to Watch

• Two classic signs of a market top are flashing, according to MarketWatch: the "capex recycling" trend and concentrated leadership. TS Lombard flagged the recycling of capital expenditures as a structural concern.

• The AI spending bonanza — $5.3T over five years — remains the dominant theme. Watch for whether Big Tech margins compress before revenue materializes.

• Tomorrow's focus: US jobs report will test the labor market narrative and shape the next move in the rate-cut debate. With Warsh at the Fed's helm, a strong number could further cement the "higher for longer" regime.

• SpaceX IPO next week will be a major sentiment test for retail and institutional appetite for growth names at premium valuations.