TQ Evening Briefing
Intel surpassed record. The DOJ dropped its Powell probe. Consumer sentiment hit the lowest reading in survey history.
THE SETUP
The Week's Last Session Answered Two Questions and Asked a Bigger One.
The market closed strong, but the base stayed uneven. Intel broke its 2000 peak and kept pushing higher. That move carried the Nasdaq and set the tone.
Iran talks in Islamabad eased oil and lifted sentiment. Equities reacted fast to any sign of de-escalation.
But consumer data moved in the opposite direction. Michigan hit the worst sentiment reading in survey history. When sentiment falls that far, discretionary spending follows within one to two quarters. Restaurants, apparel, and big-ticket retail feel it first. Travel names feel it second. The spending data hasn't confirmed the move yet. When it does, it won't be subtle.
Defense stocks have fallen sharply over two weeks. Chips have run almost uninterrupted in the same stretch. The market is pricing progress on war and policy. It is not pricing the strain underneath demand.
TQ Trade Implication
The gap between equity records and record-low sentiment holds only while spending data stays intact. Watch April retail sales for the first sign sentiment is turning into actual behavior change.
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THEME ONE
Intel Just Broke a Record That Has Stood for 25 Years.
Intel (INTC) reported earnings Thursday night that were not close. Adjusted earnings came in at 29 cents against a 1-cent consensus. Revenue beat by over a billion dollars. The forward guidance came in well above what analysts expected. The stock surged Friday and is closing above its dot-com era record from August 2000.
The turnaround now has a data point that is hard to dismiss. AI agents run on CPUs, not just GPUs. Google committed to Intel CPUs for AI workloads. Terafab chose Intel as its manufacturing partner. Six consecutive quarters of upside surprises have turned a recovery story into a momentum trade.
The US government quietly made a fortune on this move. The Trump administration converted unspent Chips Act grants into Intel equity at $20.47 per share last year. With Intel now trading near $83, that stake is worth roughly $36 billion, a paper gain of around $27 billion.
TQ Execution Bias
AMD captures the same CPU demand thesis at a lower price. But the chip index RSI hit 85, a level that signals overbought conditions. The demand signal is real. The entry point on day 18 of a winning streak is a different question entirely.
THEME TWO
The DOJ Dropped the Powell Probe. Warsh Is Now Almost a Done Deal.
The Justice Department announced Friday it is closing its investigation into Fed Chair Jerome Powell. Senator Tillis had blocked all Fed nominees while the probe was open. With it closed, his opposition dropped immediately. Warsh's confirmation odds jumped to 86% before May 15 and 98% by June 1.
The last structural obstacle to Warsh's confirmation is gone.
What this means for markets is not simple. Warsh's Senate testimony this week was careful. He said Trump never asked him for rate cuts. He walked back his own AI inflation thesis. He signaled a smaller Fed balance sheet. He called post-pandemic inflation the biggest policy error in 40 years. That is not the dovish handoff the rate-cut trade was pricing.
But it does give the Fed a confirmed leader heading into its most important decision point since the war began. That removes one major uncertainty even if the rate path itself stays unclear.
TQ Edge Setup
Confirmation resolves the leadership risk. It does not resolve the rate path. Watch the two-year Treasury yield into the April 29 Fed meeting. A move above 3.85% means markets are pricing Warsh as a hawk. A hold near current levels means they are treating him as continuity.
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THEME THREE
Consumer Sentiment Is the Worst Ever Recorded. Spending Hasn't Broken Yet.
Michigan's final April reading came in at 49.8. That is below the previous record low from June 2022. Below the pandemic. Below 2008. The worst number in more than 50 years of data. The two-week ceasefire and slightly lower gas prices lifted it two points from the preliminary reading. Two points of relief bought by a ceasefire extension.
Procter and Gamble (PG) reported Friday and beat across every region and every product category. The CFO called the consumer muted and said tax refunds were a bright spot. He warned recovery may not be a straight line.
HSBC added a longer-term warning. Fertilizer and diesel shortages across Vietnam and Thailand are threatening harvests. If Asian food exports slow, US grocery prices feel it later this year and into 2027. The Strait closure is not only an energy story. It is a food supply story on a six-to-twelve month delay.
TQ Execution Bias
Sentiment at record lows has not yet hit spending. That gap is the biggest unresolved tension in the consumer economy. Companies with pricing power and hedges like P&G and PepsiCo (PEP) hold up. Volume-dependent discretionary names are most exposed when the gap closes.
QUICK THEMES
Northrop (NOC) and Lockheed (LMT) extended their losing streaks to nine sessions. NOC is down 16% since April 13. LMT is down 18%. Trump's firing of Navy Secretary Phelan added pressure. Phelan's removal signals tighter civilian control over procurement decisions at exactly the moment defense companies need budget clarity to plan multi-year programs. When the chain of command above the acquisition process gets disrupted, contract timelines slip and forward visibility shrinks. That is what the market is pricing, not the firing itself. The defense premium is unwinding on both budget math and political risk
Oracle's (ORCL) $300 billion AI data center deal with OpenAI is hitting a Wall Street funding problem. Banks including JPMorgan (JPM) struggled to syndicate the loans. When the biggest banks have trouble distributing risk on the most prominent AI deals, the cost of capital for the whole buildout goes up. The names most exposed are the ones whose valuations depend on AI capex continuing at current pace without a financing constraint emerging. Arm Holdings trades at 75 times forward earnings on that assumption. Vertiv and Constellation Energy carry similar dependencies. If deal financing costs rise, the multiple compression starts at the top of the valuation stack and works down.
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THE CLOSE
Intel broke a 25-year record. Warsh is almost certain to be confirmed. Michigan hit the worst sentiment reading in survey history. Iran's FM landed in Islamabad. Oil pulled back.
The chip cycle and the peace odds are priced. The consumer is not. P&G said recovery may not be a straight line. HSBC warned food prices from Asian supply disruptions arrive in the US later this year.
The April 29 Fed meeting arrives with a nearly confirmed Warsh, record-low consumer confidence, an 18-day chip streak, and a Strait that is still effectively closed. Next week, the remaining facts get their turn.