NFP Hot, Hormuz Love Tap, DDOG +29%, Brent Back to $101.

Friday pre-market, 7:30 AM ET. Two things happened in the last twelve hours that pull the tape in opposite directions, and the cleaner of the two is winning. April nonfarm payrolls printed +115K against a +65K Bloomberg consensus, with the unemployment rate holding at 4.3% and March revised up by 7K to +185K, which is the second consecutive upside surprise and effectively buries the soft-landing-into-stagflation thesis that desks were running into Wednesday’s ADP. Average hourly earnings ticked to roughly 3.8% year over year from 3.5% in March, and the four-week jobless claims average is now 207K against a 215K read three weeks ago, so the labor mosaic is firmer than the macro consensus had penciled in. Overnight, US Navy destroyers and Iranian forces exchanged fire near the Strait of Hormuz around 11:00 PM ET, with both sides claiming the other shot first and Trump telling ABC News the salvo was “just a love tap” and that the ceasefire remains in effect, which moves Brent back through $100 to $101.20 (+1.4%) and lifts WTI to $97.55 in the European session. Press TV reported “the situation on Iranian islands and coastal cities by the Strait of Hormuz is back to normal” by 4:00 AM ET. Futures absorb both, with S&P +0.50%, Nasdaq +0.75%, Dow +0.32%, the 10Y at 4.41% (up six basis points on the print), VIX at 16.92, and DXY at 98.35. The Datadog beat after the bell ($1.07B revenue vs $980M, EPS $0.60 vs $0.51, FY26 guide raised to $4.30 to $4.34B from $4.06 to $4.10B) is doing the heavy lifting in semis-adjacent and observability names, with DDOG indicated +29% pre-market, while Affirm’s first GAAP profitable quarter ($11.6B GMV +35%, EPS $0.30 vs $0.17 consensus) pushes the BNPL credit confessor thesis cleanly into the bull column. Cloudflare beat the print but announced a 1,100 head 20% workforce reduction tied to agentic AI and is indicated 18% lower, and Coinbase missed at $1.41B revenue versus $1.48B with a $394M net loss driven by a $482M unrealized crypto mark, and is indicated 9% lower. The book is net constructive with a tighter cap on the Iran tail, which is no longer a tail. Our base case probability for a signed memo by next Friday’s NY close is now 48%, down from 62% yesterday morning, on the back of the Hormuz incident, even with Trump’s de-escalation tone.

The information sequence today is barbelled. The NFP print at 8:30 AM is now a clean confirmation that a Q1 weather-distortion theory was correct and that hiring has stabilized at a +120K to +130K trend, which is consistent with a 4.3% unemployment rate and a Fed that is structurally on hold through the Warsh confirmation in the week of May 11. The 6 basis point lift in the 10Y through 4.41% is the right tape reaction, and the VIX print at 16.92 (down 2.7%) is telling you that the Hormuz incident is being read as kabuki rather than escalation. The earnings tape is the better tell on the underlying economy. DDOG accelerating revenue growth from 29% to 32% with ARR over $4B is the cleanest read on hyperscaler optimization since AWS posted Q1, and it answers the bear case from January that observability spend was a cost-cut victim. AFRM printing GAAP operating profit for the first time as a public company while the BNPL delinquency rates compressed by 30 basis points on the cohort is the structural unlock for the BNPL multiple to re-rate from a fintech 12x to a payments 18x. The MercadoLibre print at +49% revenue growth (the strongest since Q2 2022) confirms that LatAm e-commerce is no longer in the cyclical doghouse, and Airbnb raising the FY26 revenue band to “low to mid teens” growth from “low double digits” is the read-across desks have wanted on the booking-window into peak summer. Cloudflare and Coinbase are the two prints that read sour, but for very different reasons, and we are positioning them differently below.

Three things into Friday:

1. NFP at +115K is not the data point that re-prices Fed expectations, but it is the data point that closes the soft-data thesis. With March revised up to +185K and AHE at 3.8% year over year, the Fed has zero asymmetry to cut into the next two meetings. The 10Y at 4.41% is the cleaner read than fed funds futures, which moved from 1.4 cuts priced for 2026 to 1.1 cuts in the last hour. We close half the SHY long from April 25 at +52 basis points mark and rotate the proceeds into a steepener via 2s/10s long the front, sized 0.4% NAV. The cleaner expression on the day is fading the front-end rally that was set up for a +60K print, with a 2Y June 17 4.10% / 4.30% put spread at 12 ticks, sized 0.2% NAV.

2. DDOG is the structural beat of the week, and the read-across through MDB, NET, and ESTC is buyable into Monday’s open. $1.07B revenue, +32% growth accelerating from +29% last quarter, FY guide raised by $260M at the midpoint, ARR through $4B with the ARR growth rate accelerating in each month of the quarter. The pre-market is +29%. We close the May 16 $145/$160 call spread from yesterday at +210% mark for a $7.10 net credit, and roll to the July 18 $185/$210 call spread for $5.20 net debit, sized 0.4% NAV. The relative pair is long DDOG / short SPLK proxy via S, sized 0.2% NAV. Risk is a Q2 enterprise commentary that walks back the AI-inference attach narrative, which we view as low probability given the call commentary on Workers AI customer overlap.

3. The Hormuz exchange of fire is a tactical event, not a structural one, and the right way to express it is through Brent options, not equity. Brent through $100 again at $101.20 means the volatility surface is repricing the September strikes, with the $100 strike implied vol moving from 38% Monday to 47% this morning. We close the September $90/$96/$100 put fly from yesterday at -25% mark for an $0.65 net debit loss, and replace it with a Brent August $95/$108 strangle at $4.30 net debit, sized 0.3% NAV. The structure pays on either a memo signing rally back to $94 or a Hormuz re-escalation through $108, which is the binary the next two weeks carries. We hold the LMT/NOC short at half size and add 0.1% NAV long XLE via the June $99/$108 call spread funded by the May $96 short put, sized 0.2% NAV.

The Macro Print

What Posted Friday Pre-Market

Key Takeaways

Our take on NFP: The 115K print, with March revised up to 185K, is the second clean upside surprise in two months. The April number runs roughly 50K hotter than the +65K Bloomberg consensus, and roughly 60K hotter than the +55K Dow Jones whisper. With AHE accelerating to 3.8% year over year from 3.5%, the wage growth gap over productivity (which posted at +0.8% Q1) is now 300 basis points, which is the structural ceiling on Fed easing into the back half of 2026. The Fed funds futures curve has now moved to 1.1 cuts priced for 2026, down from 1.4 yesterday and 2.1 a month ago. The cleanest read is that the labor market re-accelerated through the Iran kinetic phase, which is consistent with the +109K ADP from Wednesday and the soft 200K initial jobless claims yesterday.

Read-through to the May 13 CPI print: Cleveland Fed Nowcast moved to 3.5% headline from 3.6% on the Brent collapse Wednesday, but with Brent now back to $101.20 and gasoline futures up 4.2% in the last 36 hours, the May energy passthrough offset is fading. We hold the 3.0% headline / 2.9% core base case, with a 70% probability the print lands within 5 basis points of consensus, and a tail risk of 3.1% / 3.0% hot on energy. The 10Y at 4.41% is consistent with that distribution.

Today’s Calendar

Hormuz Exchange of Fire and the Iran Memo Recalibration

The fire exchange happened around 11:00 PM ET overnight, when three US Navy destroyers transiting the Strait of Hormuz came under what CENTCOM described as “unprovoked Iranian attacks” and responded with self-defense strikes. Iran’s Khatam al-Anbiya Central Headquarters claimed the US violated the ceasefire by targeting an Iranian tanker and that Iranian retaliation against US Navy vessels east of Hormuz inflicted “significant damage.” CENTCOM denied any US asset hits. Press TV reported normalization by 4:00 AM ET. Trump told ABC News the US salvo was “just a love tap” and reaffirmed the ceasefire is in effect.

The market is reading this as a tactical event for three reasons. First, the rhetoric on both sides is calibrated to de-escalate within hours, not days. Second, the Iranian strike claim has not been corroborated by independent satellite imagery, and the Iranian government’s own Press TV walked back the situation by Friday morning Tehran time. Third, the 14-point memorandum is still an active diplomatic line through Pakistan, with both sides communicating that the Hormuz incident does not derail it.

We are at 48% probability of a signed memo by next Friday’s NY close, down from 62% yesterday morning. Three reasons we lower the number. First, the Hormuz incident eliminates the option of a Friday or weekend signing window, which was the cleanest path. Second, the IRGC’s signaling on the nuclear moratorium clause was already ambiguous, and a kinetic event between US Navy assets and Iranian forces gives the IRGC an internal pretext to walk back language. Third, the GCC has not yet been brought in formally, and the UAE airspace dynamic from earlier this week creates a seam that the IRGC can exploit. The market is roughly at 60%, and we are below it.

The base case is the memo is signed in some form by the close of the Trump-Xi summit on May 15, but it is contingent rather than binding. Brent at $101.20 is repricing the tail back into the curve, but the WTI/Brent spread compression has not unwound. The structurally bullish read for energy remains the OPEC+ ministerial on May 21, where the production response to the Fujairah strike is the read.

Three catalysts we expect today:

• White House readout on Iranian response, expected 11:00 AM to 1:00 PM ET, tone matters more than substance
• Pakistani Foreign Ministry briefing, expected late-afternoon ET
• Iranian state media commentary on the Hormuz incident, watch for IRGC commander statements

Datadog Print Recap and Read-Across

The Numbers

Our Take: The DDOG print is the single best read of the week on hyperscaler optimization and AI inference attach. Revenue accelerated from 29% to 32% growth, which closed the bear thesis that 2H 2025 enterprise rationalization would compress observability spend. The customer additions over $100K ARR run-rate ticked above 4,100, with Workers AI and inference instrumentation accounting for the marginal 200 customers. The FY guide raise of $260M at the midpoint is the largest sequential beat-and-raise in the company’s history, and the Q2 guide of $1.10B implies +30% growth into the back half. PT moves from $145 to $215. Long via the rolled call spread structure outlined in the trade ideas.

Read-Across to Adjacent Names

The DDOG beat lifts the cohort that was underperforming on the AI-displaces-saas-tools narrative. Names with positive read-across into Monday: MDB (database observability and AI workload pickup, indicated +3% pre-market), ESTC (search and observability, +2.5%), HCP (HashiCorp, +2%), ZS (zero-trust into AI inference workloads, +1.5%), CRWD (the cleanest cybersecurity AI workload security adjacency, +1.3%). The relative-value short into the read-across is S (SentinelOne), where the AI workload narrative has been priced in, and SPLK is no longer a clean comp post-CSCO acquisition.

Affirm Print Recap

The Numbers

Our Take: AFRM achieving GAAP profitability for the first time as a public company is the structural unlock that triggers a multiple re-rating. The GMV growth at +35% accelerated from +29% last quarter, the funding cost compression of 125 basis points is the cleanest signal that the BNPL credit cycle is turning, and the Affirm Card user adds of 700K (run-rate roughly 2.8M new users per year) is the durable transaction-volume layer the long thesis required. Levchin’s “another one for the record books” framing is the right tone. PT moves from $80 to $115. Long via the stock collar structure outlined.

Cloudflare and Coinbase Disappointments

NET (Cloudflare) Print

Our Take: Cloudflare beat on every metric and raised the FY guide, but the 20% workforce reduction announcement, framed as a response to “agentic AI fundamentally changing the company’s work,” is a negative signal on the operating leverage path. The company is essentially admitting that the agentic-AI cost-cut wave is hitting Cloudflare’s own services pipeline harder than the Workers AI revenue tailwind, which is the inversion of the thesis that desks have been long. Pre-market is -18%. We are short via the May 16 $230 puts at $5.40 mark, sized 0.15% NAV. PT cut from $300 to $215. The longer-term read is that Cloudflare’s mid-2027 operating margin path is structurally questioned.

COIN (Coinbase) Print

Our Take: Coinbase missed on revenue and posted a large net loss driven by the $482M unrealized mark on Bitcoin assets held for investment, which is the second consecutive quarterly loss. Trading volume was light at $172B (vs $185B consensus), and the Q1 BTC average price of $80K versus $85K modeled drove the headline drag. The bull case is the subscription line at $612M (vs $580M), which is the cleanest signal that the AI-pivot narrative on Custody and Base is gaining ground. Pre-market is -9%. We close the May flat-into-print stance and short the May 16 $200/$170 put spread for $7.20 net debit, sized 0.2% NAV. PT cut from $290 to $200. The structural read is the $482M crypto mark exposes a balance-sheet duration risk that desks under-modeled.

ABNB and MELI Read-Throughs

ABNB Print

Our Take: ABNB raising the FY26 revenue band on a Q1 booking-window strength is the cleanest read on travel into peak summer. GBV at +19% is the second consecutive accelerating quarter, and the EPS beat at +50% versus consensus is operating leverage finally showing through on the take-rate compression. Pre-market is +6%. We hold the May 16 $145/$155 call spread from yesterday at +85% mark and roll to the June $155/$170 call spread for $3.40 net debit, sized 0.2% NAV. PT moves from $155 to $185. Note the company flagged Middle East travel weakness as a Q1 drag, which is now reversing on the ceasefire.

MELI Print

Our Take: MELI is the read-across mixed. The +49% revenue growth (the fastest since Q2 2022) confirms the LatAm e-commerce cyclical recovery, but the EPS miss and the 120 basis point operating margin miss reflects fintech credit cost provisioning into Brazil’s currency cycle. Pre-market is +1%. We are flat into the open. The pair trade is long MELI / short EBAY, where the geographic mix divergence is the cleanest expression. PT moves from $2,400 to $2,650.

Trade Ideas

▲ Long DDOG via Call Spread Roll

Close the May 16 $145/$160 call spread from yesterday at +210% mark for $7.10 net credit. Roll to the July 18 $185/$210 call spread at $5.20 net debit, sized 0.4% NAV. The print accelerated revenue growth from 29% to 32%, the FY guide raise of $260M is the largest beat-and-raise in company history, and the AI-inference attach narrative now has the cleanest validation point of the cycle.

Risk: A Q2 enterprise commentary that walks back the AI-inference attach narrative. The vertical caps loss at $5.20.

▲ Long AFRM via Stock Collar Roll

Hold the AFRM stock from yesterday entry at $72, mark at $84 pre-market. Close the short May 16 $80 call at $4.20 mark for a -$2.25 loss on the call wing. Roll to a short June $90 call for $1.85 credit. Long the $75 put at $1.10 against the entry $65 put. Net structure cost roughly $0.70. PT moves from $92 to $115. The GAAP profitability print is the structural multiple unlock.

Risk: A 30-day delinquency uptick of 30 bps or more on the Q1 cohort. The collar caps loss.

▼ Short COIN via Put Spread

Buy COIN May 16 $200/$170 put spread at $7.20 net debit, sized 0.2% NAV. The $482M crypto mark exposes a balance-sheet duration risk that desks were under-modeling, and the Q1 trading volume miss compounds the structural cost-leverage drag. PT from $290 to $200.

Risk: A Bitcoin rally above $90K in May would close half the realized loss path. Stop on a 4% rally pre-Friday close.

▼ Short NET via May Puts

Buy NET May 16 $230 puts at $5.40 mark, sized 0.15% NAV. The 20% workforce reduction announcement, framed as agentic-AI displacement of internal services, is the inversion of the long thesis. PT from $300 to $215.

Risk: Q2 commentary that re-frames the layoff as productivity gain rather than demand drag, which would compress the premium 30%. Stop on a $260 close.

▲ Long Brent August Strangle

Close the September $90/$96/$100 put fly from yesterday at -25% mark for an $0.65 net debit loss. Replace with Brent August $95/$108 strangle at $4.30 net debit, sized 0.3% NAV. The structure pays max on either a memo signing rally back to $94 by mid-July or a Hormuz re-escalation through $108, which is the binary the next two weeks carries.

Risk: Brent settling in the $100 to $105 range collapses the structure. Sized to be losable.

▲ Long XLE via Call Spread + Short Put

Buy XLE June 19 $99/$108 call spread at $2.80 net debit, short the May 16 $96 put for $0.85 credit. Net structure cost $1.95. Position 0.2% NAV. The Hormuz incident, the OPEC+ May 21 ministerial, and the fading energy passthrough into May CPI all rotate energy back into the bullish setup.

Risk: A signed memo by next Friday with no Hormuz follow-on collapses the front of the energy curve, which is the put leg risk. The structure caps loss at $96 strike assignment.

▼ Trim SHY Long, Add 2s/10s Steepener

Close half the SHY long from April 25 at +52 bps mark. Rotate proceeds into a 2s/10s long-the-front steepener via TUV2/UXYV2 ratio’d 2:1, sized 0.4% NAV. The NFP print closes the cuts thesis, but the 30Y at 4.92% is the duration headwind we want long the front against.

Risk: A May 13 CPI print at 3.1% headline / 3.0% core hot reverses the steepener bid. Stop on a 4.55% 10Y test.

▼ 2Y Front-End Put Spread

Buy 2Y June 17 4.10% / 4.30% put spread at 12 ticks, sized 0.2% NAV. The fed funds futures curve has moved from 1.4 cuts priced for 2026 to 1.1 cuts in the last hour, but the 2Y Treasury at 3.95% has lagged the move. The structure pays on a 2Y test back through 4.20%.

Risk: A flight-to-quality bid on a Hormuz re-escalation. The vertical caps loss at 12 ticks.

▲ STAY LONG PLTR (Reiterate)

Stock at $153 pre-mkt, +1.3%. PT $215. Hold the June $200/$220 call vertical overlay funded by the $145 short put. The AFRM and DDOG prints both lift the AI-fee-layer thesis that PLTR shares.

Risk: A softer Q2 from peers, or a Burry-style short escalation. The call vertical caps loss.

▲ Long DDOG Cohort Read-Across (MDB, ESTC)

Buy MDB June 19 $260/$300 call spread at $11.20 net debit, sized 0.15% NAV. Buy ESTC June 19 $115/$130 call spread at $3.80 net debit, sized 0.1% NAV. Both are direct cohort beneficiaries of the DDOG print read on AI workload observability and database instrumentation. PTs MDB $325, ESTC $148.

Risk: A MDB or ESTC print in late May that disappoints on the AI-attach commentary. The vertical caps loss.

Signal Tracker

Assessment: 9 BULL / 5 BEAR / 6 NEUTRAL. The mosaic is constructive on the AI-fee-layer print confirmation (DDOG, AFRM, ABNB, MELI all beat with raised guidance) and the labor market re-acceleration. The bearish counters are the Hormuz tactical risk, the COIN balance-sheet drag, and the NET layoff signal. We hold the book at +6.5% net long gross, lift duration short via the steepener, hold energy long via the strangle and XLE, and add cohort reads through DDOG, MDB, ESTC, AFRM. We trim Cloudflare, short Coinbase put spread, and watch the 11:00 AM to 1:00 PM Iran response window.

What to Watch Through Next Week

Friday May 8 (Today)

• April NFP posted at 8:30 AM (+115K, UR 4.3%, AHE +3.8% y/y).
• Univ. Michigan Consumer Sentiment 10:00 AM (preliminary May).
• Iran memo response window 11:00 AM to 1:00 PM ET.
• Treasury Budget 14:00.
• Consumer Credit 15:00.
• Fed speakers Daly and Goolsbee 16:00, hawkish lean expected post-NFP.

Monday May 11

• Senate Warsh Fed chair confirmation full vote (we model 53 to 56 votes).
• China April CPI / PPI overnight.
• Watch Iran memo signing window.

Tuesday May 12

• $42B 10Y Treasury auction (rescheduled from May 6). Tail watch given NFP repricing.
• April NFIB Small Business Optimism.

Wednesday May 13

• April CPI. Consensus 3.0% headline / 2.9% core. Cleveland Nowcast 3.5%. With Brent now at $101.20 versus $99 yesterday, the energy passthrough offset is narrower. We hold the consensus base case but watch for a 3.1% / 3.0% hot tail.
• $25B 30Y Treasury auction.

Thursday May 14

• April PPI.
• Trump-Xi summit Day 1 in Beijing. Iran focus may delay tariff and rare earth progress.
• Initial Jobless Claims.

Friday May 15

• Trump-Xi summit Day 2.
• Empire State Manufacturing.
• Powell steps back to governor; Warsh likely sworn in as chair.
• Iran memo signing window if response is favorable.

May 21: OPEC+ ministerial. Production response to Fujairah strike is the structural read.

May 22: Geneva US-Iran technical talks (Phase 2 of memo, if signed).

May 28: NVDA Q1 earnings. Index-level event.

This note reflects information available as of May 8, 2026, 7:30 AM ET. Pre-market futures continue to trade. For internal use only. Not investment advice.