McDonald’s CEO Chris Kempczinski is suffering from a bit of PR whiplash: On one hand, he’s catching heat for that viral clip of him taking a comically reluctant nibble of the new Big Arch Burger. On the other, he’s out here blaming his mother for the whole episode. But things got a bit more serious today: The fast food chain reported earnings, and they were actually pretty solid.

Earnings and revenue came in above expectations, despite what Kempczinski called a “challenging environment,” pointing to the effects of the Iran war. He focused on high gas prices, which disproportionately affect lower-income households, squeezing McDonald’s consumers.

“I think probably it’s fair to say that...it’s certainly not improving, and it may be getting a little bit worse,” Kempczinski said of consumer sentiment on the earnings call.

The company said it expects weaker sales during the current quarter compared to the same period a year ago. Shares fell 0.14% today.

Big-ticket blues

While McDonald’s shed some light on the state of US consumers, Whirlpool is making similar remarks.

The global appliance manufacturer reported a greater-than-expected loss of $0.56 per share, and revenue declined 10% year over year, though it still beat estimates. The tough quarter was largely driven by, you guessed it, poor consumer sentiment. “War in Iran resulted in recession-level industry decline in the US as consumer confidence collapsed in late February and March,” the company said in a statement.

To combat those losses, Whirlpool is implementing the “most aggressive actions…taken in a decade to restore profitability in North America,” namely hiking prices by 10% this month, with more to come in July.

Still, Whirlpool cut its guidance in half. Shares tumbled 11.91% this afternoon.

Shipping squeeze

If that wasn’t enough, Maersk came in with some equally concerning commentary.

While the shipping and logistics company beat on both the top and bottom lines and reiterated guidance—despite a 35% year over year drop in EBITDA—CEO Vincent Clerc said that oil prices hovering around $100 per barrel is costing the company roughly $500 million per month, and that some of that is being passed on to consumers. Shares fell 8.10% today.

Maersk is a shipping titan, acting as a barometer for global trade. Its statements, alongside those of McDonald’s and Whirlpool, make it clear that American consumers are becoming increasingly stretched. From fries to fridges to freight, the message is lining up—and it’s not exactly a happy meal.—SY

🟢 What’s up

• Datadog rose 31.33% after beating earnings and revenue expectations and raising full-year guidance on strong AI-driven demand.
• Albemarle gained 2.98% as better-than-expected results and rising lithium prices boosted its outlook.
• Peloton climbed 8.85% after topping revenue estimates and posting a narrow profit.
• Cybersecurity company Fortinet advanced 20.03% on a strong quarter, with revenue jumping 20% year over year.
• Heating, ventilation, and air-conditioning company AAON surged 31.49% as booming demand for datacenter cooling drove record sales and earnings.
• Warby Parker jumped 23.52% after beating expectations and unveiling an AI-powered eyewear push.
• Fluence Energy soared 39.90% after reporting a narrower-than-expected quarterly loss and announcing new supply agreements with two hyperscaler datacenter customers.

What’s down

• Shell fell 3.39% as lower production and easing oil prices offset a trading-driven earnings boost.
• Shake Shack dropped 28.26% on weaker-than-expected results tied to weather, expansion costs, and softer Middle East sales.
• Planet Fitness declined 31.19% after cutting guidance and scrapping planned price hikes amid slower sign-ups.
• Vital Farms slid 20.67% after posting a quarterly loss and lowering full-year guidance.
• Cloud computing company Fastly tumbled 38.23% as weak guidance overshadowed an earnings beat.
• Arm Holdings fell 10.10% after flagging weakness in its mobile segment tied to chip shortages and rising component costs.

Spend five minutes on a financial news site these days, and you’ll inevitably see a story about someone who used AI to invest on their behalf. In the last week alone, Bloomberg ran a piece about investment competitions pitting different LLM models against one another, and the Wall Street Journal just featured a guy who let OpenAI manage his portfolio. Both will tell you the same thing: It’s still far too early to hand an AI agent all your money and let it rip.

That isn’t stopping Silicon Valley from trying to invade Wall Street. Two days ago, Anthropic CEO Dario Amodei took the stage next to JPMorgan CEO Jamie Dimon and unveiled 10 new AI agents designed to execute financial services usually reserved for big banks’ lowest paid analysts. These include building pitchbooks and financial models, prepping for client meetings, and checking investment valuations.

For now, the pros don’t seem too worried about losing their jobs. Deutsche Bank research analyst Adrian Cox noted that complete “adoption is easier said than done, particularly among the largest organizations operating in a highly regulated industry where 99% accuracy is not accurate enough.” He cited factors like policy uncertainty, employee resistance, and integrating new tech with legacy systems among the reasons AI has a long way to go before it’s all over Wall Street.

In short: AI is encroaching on the investing world from all sides, but you’ve still got time before the bots take over completely. Until then, keep it old school and do your own investing.—MR

Riddle us this: What makes up roughly a third of the S&P 500, nearly half the Nasdaq 100, and 100% of your recurring nightmares that your children got replaced by robot clones and you can’t tell? It’s the Mag 7, of course.

“We’ve been in a momentum driven market largely led by the Mag 7 and other large tech firms,” CEO of VistaShares Adam Patti recently explained on the Brew Markets podcast. “So everyone was a genius just by investing in the S&P 500…but that’s not the reality of how the market works in most market cycles.”

Investors who think they’re buying broad diversification through passive index funds may actually be making a concentrated bet on a handful of mega-cap tech companies. “This leaves portfolios more exposed to positioning risk, particularly when the next phase of the cycle is likely to introduce new competition for capital,” explained UBS Global Head of Equities Ulrike Hoffmann-Burchardi in a note today.

In the best case scenario, that’s just fine, and you can keep riding the tech bull market. But if there’s a pullback in AI stocks—or even worse, a bubble pop—that could leave many investors far more vulnerable to the damage than they realize. And even if there isn’t a major bubble, investors could just be missing out on other opportunities.

“Investors can address this risk by complementing exposure to market-cap-weighted indices with equal-weighted index approaches,” explained Hoffmann-Burchardi. He also suggested adding exposure to emerging markets in Japan, China, and Switzerland—or, if you want to stick with tech, to look into the “enabling, intelligence, and application layers of the AI value chain, including semiconductors and chipmaking equipment, power and resources, and infrastructure.”

Think bigger than Big Tech

US equities are crushing it this earnings season, thanks in large part to the Mag 7. But analysts across Wall Street are pointing out that earnings are improving beyond just the usual tech names.

“Whereas trends are strongest in Big Tech, the median stock is tracking healthy earnings per share growth of 11% year over year in 1Q, also the highest level since 2021,” explained Bank of America head of US Equity Strategy Savita Subramanian in a research note earlier this week.

Goldman Sachs echoed the sentiment. “S&P 500 year/year EPS growth is tracking at 25%, more than twice the consensus estimate of 12% coming into the season. Much of this strength is attributable to the mega-cap technology stocks,” Chief US equity strategist Ben Snider recently wrote. “However, even excluding those figures, S&P 500 EPS growth would be on pace to register 16% in Q1, the strongest quarterly growth rate since 2021.”

The market may soon be bigger than just Big Tech, so maybe it’s time your portfolio caught up.—LB

• After raising another $1 billion, Kalshi is now worth $22 billion.
• Speaking of, campaign staffers are making thousands using prediction markets to bet on their own candidates.
• Amazon plans to start offering Ozempic pills at kiosks, as well as same-day delivery.
• Used car prices just fell for the first time this year thanks to spiking gas prices.
• Famed investor Paul Tudor Jones thinks the AI bull market could have “another year or two to run.”
• Snap and Perplexity just ended their $400 million deal to integrate AI into the social media platform.
• GameStop CEO Ryan Cohen trolled eBay by selling his used socks on the platform, calling attention to his unsolicited bid for the online marketplace—so eBay banned him.

Economic reports: The monthly jobs report is sure to steal headlines. Economists expect that 73,000 jobs were added in April, well below the 178,000 in March, though the unemployment rate should be unchanged at 4.3%. We’ll also hear from Chicago Fed President Austan Goolsbee, San Francisco Fed President Mary Daly, and Fed governors Michelle Bowman and Christopher Waller.

Earnings announcements: TeraWulf, Enbridge, and Wendy’s wrap up a big week with a whimper, not a bang.