Wall Street Lunch: Bye-Bye Bro Bubble

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The ‘bro bubble‘ in stocks and crypto has popped. (0:16) Target sees profit pressure. (2:12) Uber/Waymo driverless rides start in Austin. (3:15)

This is an abridged transcript of the podcast:

Our top story so far. The “Bro Bubble” has popped. Stocks have now wiped out all the gains since Election Day.

As tariffs go into effect, the trade war escalation is weighing heavily on global growth expectations.

George Saravelos, head of FX strategy at Deutsche Bank, says: “Up until today, many Trump administration policies could be rationalized under the ‘negotiating tactic’ mantra. (But) the scale of the trade and geopolitical policy shift now actually happening is of historical proportions.”

There is a “huge rise in uncertainty taking place in the US,” he added.

The major averages are falling further after Monday’s selloff. The S&P (SP500) is down more than 1% and is below where it traded on Nov. 5. The Nasdaq (COMP.IND) and Dow (DJI) are also shedding more than 1%.

The VIX (VIX) volatility index, also known as the fear gauge, is topping 25, a high for the year.

With cash moving from risk to safety, Treasury yields continue to fall. The 10-year (S10Y) is now below 4.15% and the 2-year (US2Y) is below 4% for the first time since October.

And crypto is back on the back foot, with bitcoin (BTC-USD) around $83,000.

All this is leading to a collapse of what BofA strategist Michael Hartnett calls the “Bro Bubble.”

Hartnett said on Friday the breach of four technical levels would send “nouveau bulls” (those jumping on the Trump Trade bandwagon) heading for the exits.

The levels were the post-election volume-weighted average prices — a ratio of price to trade volume similar to a moving average and used for intraday and short-term strategy — of Meta (META), Palantir (PLTR), SPDR S&P (NYSEARCA:SPY) and Invesco QQQ (NASDAQ:QQQ).

Yesterday, SPY fell through the $597 VWAP that needed to hold and QQQ broke through BofA’s $519 VWAP level. Today META has lost its VWAP of $639, and PLTR is the last holdout — just above its VWAP of $80.

The Bitcoin (BTC-USD) VWAP since the election was $97.600 and the inability for the crypto to stay above $97,000 was the first sign the “bro bubble” was popping, Hartnett added. The VWAP for Tesla (TSLA) was $371 and that fell in the first week of February.

Among active stocks, Target (TGT) beat Q4 EPS and sales estimates, but said it expects to see meaningful year-over-year profit pressure in Q1 relative to the remainder of the year due to ongoing consumer uncertainty, tariff uncertainty and the expected timing of certain costs within the fiscal quarter.

Target expects full-year EPS of $8.80 to $9.80 (midpoint $9.30) vs. the consensus mark of $9.24. Net sales growth in a range around 1% is anticipated, reflecting comparable sales growth around flat.

Okta (OKTA) is rallying post-earnings, winning upgrades today from D.A. Davidson and Stifel.

D.A. Davidson analyst Rudy Kess said he sees: “+11-13% Y/Y revenue growth as likely in FY26 vs. current guidance of +9-10% Y/Y.”

“With increasing new product mix, enterprise traction, channel momentum, and sales productivity, we now believe double-digit growth is sustainable.”

Meanwhile, sales of Tesla’s (TSLA) China-made electric vehicles fell 49.2% year-on-year in February, as intense market competition continues to disrupt the EV maker’s share of China’s EV market.

In other news of note, the partnership between Alphabet’s (GOOG) (GOOGL) Waymo and Uber (UBER) goes into action today.

Riders who request an UberX, Uber Green, Uber Comfort, or Uber Comfort Electric in a 37 square-mile area of Austin could be matched with a Waymo fully autonomous all-electric Jaguar I-PACE at no additional cost. Before a nearby Waymo vehicle is sent, customers will have the option to accept or switch to a driver.

Once the Waymo arrives, riders can unlock the vehicle, open the trunk, and start the trip from the Uber app.

The service will expand to Atlanta later this year. Waymo also plans to begin offering rides in Miami next year through its own app to add to the service that is already running in Phoenix, San Francisco and Los Angeles.

And in the Wall Street Research Corner, Morgan Stanley analysts highlighted companies they think are more insulated from tariffs compared to their industry peers and more able to defend their pricing and market share.

Strategist Mike Wilson sees tariffs “as more of a rotational driver than an index-centric one,” as the impact should be concentrated in a few industries, including consumer discretionary (XLY), and more specifically autos, technology hardware and capital goods.

“Services industries across financials (XLF), software (XSW), media and entertainment and consumer services are less directly impacted, and we maintain our favorable views on these pockets of the market in relative terms,” Wilson said.

Among the names are Levi Strauss (LEVI), United Rentals (URI), Fastenal (FAST), Zoom Communications (ZM), Albertsons (ACI), Dollar General (DG), and Ulta Beauty (ULTA).

Check out the whole list.