Morning Report

Take: Two clusters owned the move Friday. Defense (Lockheed, RTX, L3Harris) and rails (CSX, Norfolk Southern, Union Pacific) ran as a pack on earnings beats, joined by life-science tools (Thermo Fisher). Against them, T-Mobile fell hard despite a clear EPS beat -- the bar was already priced in -- while Alphabet and Tesla extended the megacap tech selling that defined the week. The session left a consequential setup: Microsoft, Meta, and Amazon all report next week, and Moody's went on the record Friday evening saying AI capex is now large enough to threaten their credit quality.

• ALLEAllegion · 4.0× normal+10.4%
• GLGlobe Life · 4.0× normal-7.0%
• LMTLockheed Martin · 3.8× · reported+10.5%
• TMOThermo Fisher Scientific · 3.8× · reported+8.7%
• DGXQuest Diagnostics · 3.7× normal+8.6%
• RTXRTX Corporation · 3.7× · reported+7.3%
• CSXCSX Corporation · 3.6× normal+5.8%
• DOVDover Corporation · 3.5× normal-7.8%
• NSCNorfolk Southern · 3.4× · reported+5.3%
• ROLRollins, Inc. · 3.3× normal-9.3%
• TMUST-Mobile US · 3.3× · reported-10.8%
• URIUnited Rentals · 3.3× normal+10.1%
• TSLATesla, Inc. · 3.1× normal-14.5%
• LUVSouthwest Airlines · 3.1× normal-6.2%

• CMCSAComcast · 0.1% above low21.92
• ORCLOracle Corporation · 0.5% above low120.04
• TTDThe Trade Desk · 0.5% above low16.79
• DISThe Walt Disney Company · 0.7% above low92.83
• MCDMcDonald's · 0.7% above low262.80
• AZOAutoZone · 0.7% above low2923.50
• PEPPepsiCo · 0.9% above low134.95
• PSKYParamount Skydance · 1.0% above low8.49
• ISRGIntuitive Surgical · 1.1% above low332.02
• CCICrown Castle · 1.1% above low74.57

The thread: consumer names (McDonald's, PepsiCo, Lowe's, Nike, Kroger, AutoZone) next to media, ad-tech, and telecom/towers (Comcast, Trade Desk, Disney, Paramount, Crown Castle, T-Mobile, Charter). Consumer-facing and growth-multiple cohorts both out of favor simultaneously. +16 more within 3%.

• TMUST-Mobile US · EPS 3.13 vs 2.49 est-10.8%
• LMTLockheed Martin · EPS 7.94 vs 7.22 est+10.5%
• TMOThermo Fisher Scientific · EPS 6.03 vs 5.71 est+8.7%
• RTXRTX Corporation · EPS 1.89 vs 1.66 est+7.3%
• CMCSAComcast · EPS 1.04 vs 0.97 est-6.8%
• HONHoneywell · EPS 1.95 vs 1.80 est+5.7%
• NSCNorfolk Southern · EPS 3.52 vs 3.23 est+5.3%
• UNPUnion Pacific · EPS 3.41 vs 3.20 est+4.0%
• INTCIntel · EPS 0.30 vs 0.10 est-2.3%
• FCXFreeport-McMoRan · EPS 0.74 vs 0.62 est-2.3%

T-Mobile beat handily and still fell 11%, the tell that the bar was already priced in. Small caps filtered out (nothing under $50B).

• Moody's landed a post-close warning that "unprecedented" AI capex threatens credit quality at Amazon, Meta, Alphabet, and other hyperscalers. Microsoft, Meta, and Amazon all report next week, making each one a live test of whether the spending continues or the market draws a line.
• Quiet otherwise · no after-hours blowups beyond the earnings reporters already in the scan.

Quiet overnight in markets.

• Moody's says AI spending is now "unprecedented" and threatens credit quality at Amazon, Meta, Alphabet and othersCNBC
• In a first, a Chinese woman wins the prestigious Fields MedalNPR
• Albertsons stock plunges as weaker grocery spending cuts into its sales and earnings outlookCNBC
• Southwest Airlines put Texas jet fuel on a boat to LA for the first time amid West Coast supply worriesCNBC
• Eli Lilly to file its next-gen obesity drug retatrutide in 2027 after clearing two more trialsCNBC

Also today: EU fines Google ~$1 billion in latest enforcement action (SEJ roundup).

• ChatGPT Ads gets proper campaign management tools. Conversion-optimized bidding (oCPC), geo exclusions, daily budget pacing, bulk API support, and AppsFlyer/Adjust integrations landed this week. ChatGPT Ads is now viable for performance marketers who previously had no way to optimize toward conversions or exclude regions. SEL
• Large publishers are seriously weighing blocking Google Search entirely. Clicks from Google have kept declining as AI Overviews answer queries in place, and some publishers say the value exchange no longer justifies letting Google index their content. If one major outlet follows through, it shifts the SEO traffic math for everyone doing organic. Roundtable
• Google AdSense is retiring the Related Search format on August 6. The Related Search auto-ads format disappears from sites and the AdSense UI in under two weeks. Any publisher relying on it for revenue has a hard deadline to act. Roundtable
• Google Ads AI Max for Shopping campaigns is expanding. More advertisers are seeing AI Max reach Shopping, including text customizations and final URL expansion. Worth auditing your Shopping campaign settings before AI starts rewriting them. Roundtable
• Google Search growth eased in Q2 after a year of acceleration. Alphabet's Q2 showed search revenue growth pulling back as AI Overviews cannibalize lower-intent queries. Pichai maintained AI search sends more total clicks overall, but Friday's -7% GOOGL move is the market's read on where the trend leads. SEJ

• Jul 17Phase 2 -- Build the sponsorship engine (the real money)no project
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