The Morning Brief

Futures are higher on a Trump threat and a Beijing signal that could matter more than the threat itself: markets are pricing geopolitics as noise while quietly repricing China's tech dependence on U.S. chips.

Overnight, the real story is China, not Iran.

The Financial Times reports Beijing is reviewing its dependence on Broadcom (AVGO) switches in data centers, with a separate report saying Broadcom hardware sits in up to 90% of state-owned Chinese firms' infrastructure. That's a direct read on how far China can go in decoupling from U.S. networking gear, and it lands alongside a report that a Chinese business delegation's planned Trump-Xi visit is in doubt over unresolved U.S. investment disputes. Names with China exposure, Apple (AAPL), Alphabet (GOOGL, GOOG), Nvidia, GM, Stellantis, are all tagged in the coverage. Separately, Trump's threat at the UNGA to "annihilate" Iran absent a peace deal is getting credit for lifting S&P and Dow futures overnight, even as crude fell further and the Fear & Greed gauge stayed in "Fear" despite the Nasdaq's record close. The disconnect, risk-on futures against falling oil, is the overnight tell.

**On rates, the New York Fed's Roberto Perli said reserve management purchases aren't on a preset course and called the Fed's toolkit "working very well," a reminder that balance-sheet mechanics remain a live variable heading into the next FOMC cycle.

The AI trade is fighting itself this morning.

JPMorgan says Meta's (META) new Muse app is outpacing ChatGPT's early download pace and could become AI's biggest consumer app. Stifel upgraded Microsoft (MSFT) to Buy with a $575 target. But Fidelity's strategist called the AI trade "dead money," warning the $3.3 trillion buildout is inflationary with unknown returns, and Michael Burry is reportedly adding to shorts in Micron, Palantir, Nebius and the SOXX semiconductor ETF. Meanwhile OpenAI cut GPT-6 pricing 50% and Anthropic slashed Claude costs 40%, intensifying the margin question just as Apple's hardware chief touted "no cost per token" on new Macs as a direct shot at Nvidia's economics, and Qualcomm rolled out new Snapdragon chips aimed at Apple's A20 Pro.

Single names to watch premarket:

Worthington Enterprises (WOR) is up sharply after a Q1 beat on both lines. KB Home (KBH) posted a Q3 double beat despite a "weakening" housing market. IonQ (IONQ) is higher on a real-time quantum error-correction demo. On the downside, Biomea Fusion (BMEA) fell after hours on a delayed obesity-trial readout and a proposed offering, InnovAge (INNV) slid on a 10-million-share secondary, and Voyager Technologies dropped after unveiling a $350 million convertible notes offering.

On the radar today:

General Mills (GIS), Cintas (CTAS) and Paychex (PAYX) all report before the bell, with Cracker Barrel (CBRL) also on deck. Watch crude for direction on the Iran headlines and Broadcom for the China read-through.

Bottom line: futures are up on geopolitical bravado, but the more durable overnight signal is China quietly testing life without Broadcom.