Morning Forecast: Wednesday 6 May
Peace breaks out, AI prints, and private credit takes its first real hit.
This content is for informational and educational purposes only and does not constitute financial advice. Always do your own research. Not financial advice (NFA).
👀 Today’s Stories at a Glance
🕊️ Trump pauses Hormuz escort operation: Brent crude fell 4% to $109.87 yesterday on Iran deal progress signal.
💥 HSBC $400M private credit loss: Market Financial Solutions blowup pulled British banks lower and drove FTSE 100 down 1.4%.
🚀 AMD data center revenue jumps 57%: Beat-and-raise quarter sent shares up 15% after hours, countering artificial intelligence capex skepticism.
🤖 OpenAI plans $50B compute spend: Brockman testified the ChatGPT maker will burn $50 billion on compute through 2026.
💊 White House touts $529B drug savings: Council of Economic Advisers projection lands far above prior Congressional Budget Office estimates.
🛢️ Canada-Wyoming pipeline hits 72% bookings: Producers have committed 400,000 barrels daily, just shy of the 80% construction threshold.
🏛️ Senate earmarks $1B for ballroom security: Grassley’s $70 billion homeland package routes funds to East Wing upgrades.
🎮 GameStop’s $56B eBay bid stalls: Target closed $15 below the offer price, signaling markets doubt the deal closes.
🧠 One Big Thing
First Crack in Private Credit
HSBC's $400 million loss tied to British bridging lender Market Financial Solutions opened the first credible crack in major-bank private-credit exposure. The bigger figure on the call was $111 billion in total private-markets exposure on HSBC's book, of which $22 billion sits in private credit. British bank shares broke across the board: NatWest down 3.6%, Lloyds 3.4%, Barclays 3.3%. The global private credit market now sits near $3.5 trillion, and regulators in Washington, London and Brussels are probing how banks fund non-bank lenders through warehouse lines. Investors should track exposure at Apollo, Blue Owl, Ares, and regional United States bank warehouse-lending books.
⚖️ Fear & Greed
📉 The Number That Matters
$1.4 TRILLION
OpenAI has committed over $1.4 trillion in long-term infrastructure spending, with $600 billion in projected cumulative compute spend by 2030. Against that $1.4 trillion, current revenue runs near $24 billion annually.
⚔️ Winners vs Losers
Winners
EVC 0.00%↑: Entravision Communications surged after reporting Q1 2026 revenue up 114% to $197M, crushing the $121M consensus, with the Advertising Technology & Services segment posting 204% revenue growth and the company swinging to a $22M GAAP profit.
AVTX 0.00%↑: Avalo Therapeutics jumped after its Phase 2 LOTUS trial of abdakibart in moderate-to-severe hidradenitis suppurativa met its primary endpoint at both doses, with the company simultaneously pricing a $375M follow-on offering at $17.75 per share to fund Phase 3 development.
HUT 0.00%↑: Hut 8 Corp. soared after commercializing the first phase of its Beacon Point AI data center campus through a 15-year, $9.8 billion lease with a high-investment-grade tenant for 352 MW of IT capacity, bringing total contracted AI campus lease revenue to $16.8 billion.
COMP 0.00%↑: Compass Inc. rallied after reporting Q1 2026 revenue of $2.7 billion (up 99% on the Anywhere acquisition) with a beat on EPS and EBITDA, raising full-year actioned cost synergy targets to $300M from $250M and guiding Q2 revenue to $4.0–$4.2 billion.
FLEX 0.00%↑: Flex Ltd. spiked after fiscal Q4 adjusted EPS of $0.93 beat the $0.87 consensus and the company unveiled plans to spin off its Power & Cloud data center infrastructure unit, with FY27 Q1 guidance of $7.4–$7.7B revenue and $0.86–$0.92 EPS topping Street estimates.
AMD 0.00%↑: Advanced Micro Devices ripped higher after Q1 revenue of $10.25B and EPS of $1.37 topped estimates, Q2 guidance of $11.2B blew past consensus on data center sales up 57% to $5.8B, and Goldman Sachs upgraded the stock to Buy with a price target hike to $450 from $240.
UBER 0.00%↑:Uber Technologies jumped after Q1 gross bookings rose 21% in constant currency, Non-GAAP EPS of $0.72 beat estimates, and Q2 guidance of $56.25–$57.75B in bookings and $2.70–$2.80B in adjusted EBITDA came in well above Street expectations.
INTC 0.00%↑: Intel Corporation extended yesterday’s 13% surge after Bloomberg reported Apple is in early talks to use Intel and Samsung as chip foundry partners for processors in U.S. devices, marking a potential validation of Intel’s foundry turnaround strategy.
Losers
PRIM 0.00%↑: Primoris Services Corporation collapsed after Q1 revenue of $1.56B missed the $1.74B estimate by 10%, adjusted EPS of $0.59 came in 30% below the $0.84 consensus, and management cut full-year adjusted EPS guidance by 17% to $4.90 with EBITDA guidance also coming in below expectations.
TMDX 0.00%↑: TransMedics Group plunged after Q1 adjusted EPS of $0.30 missed the $0.62 consensus by 52% on margin compression, with gross margin falling to 58% from 61% even as revenue grew 21% to $173.9M.
KVYO 0.00%↑: Klaviyo Inc. tumbled despite a Q1 beat ($0.22 EPS vs $0.19 estimate, $358M revenue vs $349M consensus) after management flagged softness in smaller entrepreneur customer additions and guided to a sequential decline in operating margins on heavier engineering and go-to-market spending.
ANET 0.00%↑: Arista Networks dropped after Q1 revenue of $2.71B and EPS of $0.87 beat estimates but the raised full-year 2026 growth outlook of 27.7% fell short of buyside expectations of 28–30%, with Q2 operating margin guidance of 46–47% signaling further compression from 47.8% in Q1.
📊 Market Snapshot
Cryptocurrencies:
Bitcoin (BTC): $82686 (▲ 2.22%)
Ethereum (ETH): $2415 (▲ 2.34%)
XRP: $1.45 (▲ 2.82%)
Equity Indices (Futures):
S&P 500: $7328 (▲ 0.83%)
NASDAQ 100: $28603 (▲ 1.66%)
FTSE 100: £10479 (▲ 2.10%)
Commodities & Bonds:
10-Year US Treasury Yield: 4.35% (▼ -1.81%)
Oil (WTI): $91 (▼ -11.82%)
Gold: $4708 (▲ 3.35%)
Silver: $77.48 (▲ 6.40%)
Data as of: UK (BST) 12:30 / US (EDT): 08:30 / Asia (Tokyo): 21:30
✅ 5 Things to Know
🕊️ Trump Pauses Hormuz Operation, Cites Iran Deal Progress
President Trump paused “Project Freedom,” the day-old US Navy operation to escort commercial shipping through the Strait of Hormuz, in a Truth Social post yesterday afternoon citing “Great Progress” toward a final agreement with Iran. The reversal came hours after Secretary of State Marco Rubio framed the same operation as a life-or-death rescue of the roughly 23,000 sailors still stranded in the Persian Gulf. Defense Secretary Pete Hegseth and Joint Chiefs Chairman Gen. Dan Caine separately said the April 8 ceasefire still holds, with Caine adding that Iran’s UAE attacks fell “below the threshold of restarting major combat operations.” (CNBC)
Markets read it as a credible off-ramp signal. Brent crude fell 4% to $109.87 yesterday, WTI dropped 4% to $102.27, and stock futures rose further on Trump’s late-afternoon announcement as oil-driven inflation worry eased. The diplomatic detail mattered as much as the price action. Iran’s Islamic Revolutionary Guard Corps issued a statement late yesterday categorically denying it carried out Monday’s UAE strikes, with reports of a serious split between Iran’s elected leadership and military hardliners over what President Masoud Pezeshkian reportedly called “completely irresponsible” attacks. The Pakistan mediation channel is back open, and Rubio said Washington will introduce a UN Security Council resolution co-sponsored by Saudi Arabia, the UAE, Bahrain, Kuwait and Qatar to condemn Iran’s tolling of the strait. (CNBC)
Sensei’s Insight: Trump’s pause is the first credible diplomatic signal since talks broke down in mid-April. If the agreement actually lands, oil could give back $20 or more on day one. If Pakistan’s channel collapses again, the next escalation comes with political cover most retail investors aren’t pricing.
💥 HSBC’s $400M Private Credit Hit Cracks UK Banks
Europe’s largest bank reported first-quarter results yesterday with a $400 million credit loss tied to the February collapse of UK bridging lender Market Financial Solutions, structured through Apollo’s Atlas SP unit. HSBC stock fell as much as 6% in London, the worst performance on the FTSE 100, which itself dropped 1.4% in its biggest single-day session since March. The selloff cascaded across UK banks: NatWest down 3.6%, Lloyds 3.4%, Barclays 3.3% (which booked its own £228 million MFS hit separately), and Standard Chartered 3.1%. HSBC’s pretax profit of $9.4 billion came in below the $9.59 billion consensus, and total expected credit losses reached $1.3 billion for the quarter. (Yahoo Finance)
The bigger number on the call landed almost as a footnote. HSBC’s total private-markets exposure is $111 billion, with $22 billion in private credit and $3 billion in securitization-financing structures of the type that produced the MFS loss. CFO Pam Kaur said internal reviews showed nothing comparable elsewhere in the book, but markets aren’t taking that on faith. UK 30-year gilt yields hit 5.80% yesterday, the highest level since 1998, on parallel concerns about stagflation and fiscal arithmetic. The global private credit market is now around $3.5 trillion, and regulators in Washington, London and Brussels are already probing how banks fund non-bank lenders through warehouse lines and securitization deals.
Sensei’s Insight: One cockroach is rarely alone. HSBC’s $111 billion private-markets exposure is now the headline number bears will quote until the next bank reports. Apollo, Blue Owl, Ares and the warehouse-lending books inside US regional banks are the obvious places to look next.
🚀 AMD’s Data Center Revenue Up 57%, Stock Surges 15%
Advanced Micro Devices reported first-quarter results after the close yesterday that beat top to bottom and lifted second-quarter guidance well above Wall Street expectations. Revenue came in at $10.3 billion against a $9.85 billion consensus. Adjusted earnings per share were $1.37 versus $1.27 expected. Data center revenue, the AI accelerator line investors are watching most closely, jumped 57% year-on-year to $5.8 billion. Q2 revenue guidance of $11.2 billion plus or minus $300 million implies roughly 46% growth, ahead of consensus near $10.6 billion. Free cash flow was a record $2.6 billion. The stock jumped roughly 15% in extended trading. (CNBC)
CEO Lisa Su called the print “outstanding” and said server growth will accelerate as AMD scales supply to meet demand. The result lands at a moment when AI capex skepticism had been climbing. Palantir slid 5% yesterday despite a beat-and-raise quarter on valuation concerns; Shopify, PayPal and Duolingo all fell between 7% and 10% after their own prints. AMD’s number is the cleanest counter-data point this earnings season. It also pairs with OpenAI President Greg Brockman’s same-day disclosure (see below) that the ChatGPT maker plans to spend $50 billion on compute this year. The next event for the AI complex is Nvidia’s earnings on May 20.
Sensei’s Insight: AMD just put real numbers behind the AI demand thesis at the moment skeptics were getting loudest. A 46% Q2 revenue guide papers over a lot of valuation worries. Lisa Su’s commentary on Instinct GPU customer ramps will dictate whether the chip space rallies into Nvidia or fades on profit-taking.
🤖 OpenAI Will Burn $50 Billion on Compute This Year
OpenAI President Greg Brockman testified yesterday in the Musk versus Altman trial in federal court in Oakland that the ChatGPT maker expects to spend $50 billion on computing power before the end of 2026. Brockman, on his second day on the stand, said the company’s compute bill ran roughly $30 million in 2017. OpenAI has now committed to over $1.4 trillion in long-term infrastructure spending, with projected total compute spend of $600 billion by 2030. (Bloomberg)
The funding behind those bills is now the largest private capital structure in technology history. OpenAI’s $122 billion February funding round priced the company at an $852 billion valuation and pulled in $50 billion from Amazon (much of it bundled with AWS commitments), $30 billion from Nvidia (largely tied to deploying five gigawatts of Vera Rubin systems), and $30 billion from SoftBank in three tranches landing this year. Microsoft’s separate stake from 2019 to 2025, originally about $13 billion, is now worth roughly $228 billion. Against all that, OpenAI is expected to lose around $14 billion this year on a revenue run rate near $24 billion, and burn $57 billion annually by 2027. Brockman disclosed his own personal OpenAI stake at close to $30 billion. (CNBC)
Sensei’s Insight: $50 billion is the cleanest number anyone has put on AI compute spending in 2026, and it lands the same day AMD’s data center revenue grew 57%. The math works only if OpenAI keeps growing into the bills. The Musk verdict is the wildcard most investors aren’t pricing.
💊 White House Claims $529B Decade Savings From Drug Deals
The White House Council of Economic Advisers released projections yesterday claiming the administration’s “Most Favored Nation” pricing framework will produce $64.3 billion in combined federal and state Medicaid savings over 10 years and $529 billion in total economy-wide savings, including private insurance. The most aggressive model in the report puts the figure at $733 billion. All 17 of the originally targeted drugmakers (Pfizer, Eli Lilly, Merck, J&J, AbbVie, Amgen, Regeneron, Novo Nordisk and the rest) have now signed deals, covering an estimated 86% of the branded drug market and committing $150 billion in US manufacturing. (AP)
The harder question is verification. Public Citizen has filed Freedom of Information Act lawsuits seeking the deal terms, which Pfizer and Lilly have called confidential. Drugmakers raised list prices on more than 350 branded medications at the start of 2026, up from roughly 250 a year earlier; Pfizer alone hiked 80 products. Combined profits at 15 signers jumped 66% in the past year to $177 billion, according to Bernie Sanders’ staff. The Congressional Budget Office’s most recent estimate of a similar policy produced a roughly 5% price reduction, well short of the figures the White House released yesterday. The structural risk sits with pharmacy benefit managers (Cigna’s Express Scripts, CVS Caremark, UnitedHealth’s OptumRx), whose intermediation the direct-to-consumer TrumpRx channel is designed to bypass.
Sensei’s Insight: The $529 billion is campaign math, not a CBO score. Pharma stocks have rallied through every “price cut” announcement because the actual concession is voluntary, opaque, and concentrated in Medicaid. The PBM names are where the real margin pressure quietly sits.
Stories You Might Have Missed
🛢️ Canada-Wyoming Oil Pipeline Hits 72% of Commitments
Producers have committed roughly 400,000 barrels per day to the proposed cross-border pipeline from Alberta to Wyoming, four sources told Reuters in an exclusive yesterday. That is about 72% of the line’s planned 550,000-bpd initial capacity, just short of the 80% threshold operators typically require before committing to construction. Sponsors South Bow and Bridger Pipeline have confirmed shippers including Cenovus Energy, Canadian Natural Resources, Tamarack Valley, Whitecap Resources and Strathcona Resources. Trump signed the cross-border presidential permit a week ago, and the project is essentially a quiet revival of the cancelled Keystone XL. Construction could begin in fall 2027 and finish by late 2028 or early 2029, materially improving economics for Canadian heavy-crude producers and US Gulf Coast refiners configured for heavy oil. (Reuters)
🏛️ Senate GOP Slates $1B Taxpayer Funds for Trump Ballroom
Senate Judiciary Chairman Chuck Grassley released a $70 billion homeland-security reconciliation package on Monday that earmarks roughly $1 billion for Secret Service “security adjustments and upgrades” tied to Trump’s East Wing ballroom project, including bunkers and bomb shelters. The push followed the April 25 attempted assassination of Trump at the White House Correspondents’ dinner. The bill also contains $38.2 billion for Immigration and Customs Enforcement, $26 billion for Customs and Border Protection, and $1.5 billion for Justice Department bureaus. Trump previously said the ballroom would “not cost taxpayers a dime”; the legislation contradicts that, and Democrats plan to force a floor vote to strip the provision. The market-relevant read is fiscal: another billion-dollar add stacking onto a deficit picture that helped push the UK 30-year gilt to a 27-year high yesterday. (Bloomberg)
🎮 GameStop’s Audacious $56B eBay Bid Falls Flat
GameStop disclosed an unsolicited $55.5 billion offer for eBay over the weekend at $125 per share, half cash and half GameStop stock, financed in part by a non-binding $20 billion debt commitment from TD Bank. CEO Ryan Cohen pitched it as creating “a legit competitor to Amazon” and pledged $2 billion in annual cost cuts within 12 months of closing. eBay confirmed receipt but said GameStop never made contact before the bid. Markets are skeptical for obvious reasons: GameStop’s market cap is roughly a quarter of eBay’s. GameStop fell 10% Monday, eBay closed yesterday at $110, well below the $125 offer, signaling the market doesn’t think this gets done. Cohen would become CEO of the combined company. (Bloomberg)
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This content is for informational and educational purposes only and does not constitute financial advice. Always do your own research. Not financial advice (NFA).