Morning Reads

Earnings latest: Tesla (TSLA) pares gains on capex plans, but points to AI profits and Cybercab production.

Bessent speaks: Many U.S. allies have asked for currency swaps amid economic turbulence from the Iran war.

Athleisure revival? Struggling to find its footing, Lululemon (LULUhas a new CEO and she's a former Nike (NKE) executive.

CAR crash!

What goes up must come down... especially if it's a meme stock. Shares of Avis Budget (CAR) have been on a tear over the past month, soaring some 600% from below $100 to over $700. The party finally came to an end on Wednesday, with the stock falling back to earth following a quick surge in the opening minutes. After all was said and done, the car rental company had tumbled by nearly 40%, shaving $270 off its share price and ending the session in the $400-range (CAR is down another 6% in premarket trade).

Sign of the times: Avis Budget has all the characteristics of a meme stock. The firm reported billion-dollar net losses over the past two years, while short interest has grown to a high of 25.55%, making it susceptible to significant short squeezes. Remember the "meme trade" of rival car rental chain Hertz (HTZ) in 2020? That run-up heralded the most famous "meme trade" of them all... GameStop (GME) in 2021. Back then, Avis also found itself on the Wall Street Bets list, with pump and dumps of the stock even cycling into 2022.

When traders get exuberant, like the rapid buy-the-dip action that followed the peak of the Iran war, silly money can send stocks on a ride. It's happening now and will likely happen again. Concentrated institutional ownership of Avis Budget hasn't helped the situation, with two hedge funds - SRS and Pentwater Capital - said to own 82% of the company, thereby limiting the available float.

Rental reckoning: Seeking Alpha analysts have been raising red flags on Avis Budget (CAR) the entire way up. Vittorio Bertolini cited short-squeeze risks in early April, Doug Collins warned of float mechanics earlier this week, and Investing Group Leader Ian Bezek sounded the alarm yesterday ahead of the massive plunge. The latter has also signaled caution regarding the fresh volatility surrounding Hertz (HTZ), as both car rental players remain on the radar due to recent demand fueled by airport gridlock and the partial government shutdown.

Here's the latest Seeking Alpha analysis

40%+ ROE Leaders: Stocks That Can Thrive In Volatile Markets

NVIDIA Vs. AMD: Buy The Dominant Leader At A Discount

Micron: Dead Cats Don't Bounce Twice

Don't Get Too Comfortable: The Pullback Could Be Epic

The Trade Driving The S&P 500 Higher May Not Last

What else is happening...

HHS Secretary RFK Jr. would support banning junk food TV ads.

Marijuana MSOs surge as Trump set to formally reclassify cannabis.

Report: Meta (META) tracking keystrokes in AI training project.

GE Vernova (GEV) hits all-time high after Q1 beat and raise.

Lufthansa (DLAKF) cuts 20,000 flights to save on jet fuel costs.

U.S. government nears $500M rescue deal for Spirit (FLYYQ).

KALSHI fines three congressional candidates over insider bets.

Worries for Fair Isaac (FICO) amid new types of credit scores.

Navy Secretary is ousted amid clash with Pentagon leadership.

Energy crisis: UK telecom firms warn of mobile signal rationing.

Today's Markets

In Asia, Japan -0.8%. Hong Kong -1%. China -0.3%. India -1.1%.
In Europe, at midday, London -0.7%. Paris +0.2%. Frankfurt -0.4%.
Futures at 7:00, Dow -0.7%. S&P -0.5%. Nasdaq -0.4%. Crude +1.5% to $94.37. Gold -1% to $4,706.70. Bitcoin -1% to $77,498.
Ten-year Treasury Yield +1 bp to 4.32%.

On The Calendar

Companies reporting today include Intel (INTC) and Lockheed Martin (LMT).


Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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