Apple (AAPL) growth, US inflation, falling China, OPEC, company financial news
- The growth of Apple shares helped SPY to reach a small plus.
- Value and small cap fell slightly in price.
- In the morning the markets are neutral.
- We are waiting for inflation data and news from the Fed.
• Markets will remain cautious through the morning hours in Europe ahead of a key session in the US, where inflation data is due in the morning before the Federal Reserve meets to set rates and release its economic forecasts. This is likely to eclipse final German CPI data and UK monthly GDP data
• Economists expect headline US inflation to stabilize at an annual rate of 3.4% in May. If things get much hotter, they won't be well received by stock markets at record highs, especially if they appear to be reversing the blissful cooling that began in April.
• Markets expect the Fed to leave interest rates unchanged, so the focus will be on economic forecasts and how Chairman Jerome Powell explains them at his press conference. As for rates, the average Fed forecast at its March meeting called for three cuts this year. This is likely to change in response to persistent inflation and a strong economy. Markets are currently pricing in a rate cut of about 40 basis points in 2024. So if the median forecast falls to even one 25 bps cut, it would be a blow, and a zero forecast would be very aggressive.
• Venture capital firms are pressuring startups to cut ties with Chinese investors amid growing scrutiny from Washington - FT. For example, artificial intelligence startup HeyGen, founded in Shenzhen and relocating to Los Angeles, asked its Chinese investors - IDG Capital, Baidu Ventures, HongShan (formerly Sequoia Capital's venture capital in China) and ZhenFund - to sell their shares to their American counterparts.
• Consumer prices in China increased by 0.3% y/y in May. The producer price index fell by 1.4% y/y. These are signs of depression. Beijing continues to try to boost sluggish consumption.
• Apple (AAPL) shares rose 7% yesterday. They reached a new historical record as investors appreciated the announcement of the Apple Intelligence artificial intelligence platform. Morgan Stanley raised their target price for AAPL to $270.
Apple Pay will have more payment options coming to Windows and Chrome users this fall - AP
Apple plans to add several new features to Apple Pay and Apple Wallet later this year that will allow financing, rewards, and buy options to be more deeply integrated into iPhone. now, pay later."
• Affirm (AFRM) shares rose 11%. The company, which provides buy now, pay later payment options, has announced a partnership with Apple Inc.
• Apple's payment initiatives were a negative for PayPal (PYPL) shares - minus 3%.
• After OPEC+ surprised the market by announcing plans to increase production, hedge funds sold a record amount of oil - Reuters
In the seven days ending June 4, hedge funds and other money managers sold the equivalent of 194 million barrels across six major futures and option contracts.
Sales of crude oil in general and Brent crude in particular were also the fastest on record as traders concluded the oil market would be stable for the rest of the year and into 2025.
• The Fed's stance on extending the length of the rate hold period hurts companies expecting a rate cut - Bloomberg
US businesses and consumers began the year with hopes that interest rates would finally fall and made big plans to buy equipment or a home. Now all this is on hold, which will slow down the economy for the foreseeable future.
• Moderna (MRNA) President: Company's outlook 'stabilizing' thanks to new data on COVID flu vaccine. Moderna is on track to win FDA approval for a third mRNA vaccine if the regulator likes data released Monday for a combination flu and whooping cough virus vaccine.
• Boeing aircraft deliveries fell by half in May compared to last year - Reuters.
• GM approves $6 billion share buyback amid strong demand for gasoline vehicles - Reuters. The company also lowered its 2024 sales forecast for its EVs due to weak demand.
• An increase in the number of companies doing stock splits this year has Wall Street wondering who might be next. Some analysts point to Meta Platforms.
• Elon Musk dropped his lawsuit against OpenAI's Sam Altman.
• Citi's internal documents show multiple problems within the $515 billion division. Citi's wealth management division lags competitors in key areas of the business.
• The US wants to impose further restrictions on China's access to AI chips. Shares of Paramount Global (PARA) fell 8% in late trading. The company has stopped discussing a possible deal with Skydance Media.
• ORCL shares rise 9% after the report. OpenAI will use Oracle's cloud infrastructure.
The cloud business is pushing stocks higher.
• Taylor Swift favorite Golden Goose is targeting a $2 billion valuation in its upcoming IPO. The celebrity footwear brand was launched 24 years ago in Italy and is owned by British private equity firm Permira. The IPO will be the largest public offering in Italy since gambling company Lottomatica.
Today
- At 15-30 data on consumer inflation in the US for May.
- In the evening, the Fed will publish a decision on monetary policy. The main event may be the publication of a dot plot of interest rate expectations. And then a press conference by the head of the Fed.
- Annual shareholder meetings of Target (TGT), Caterpillar (CAT) and Dick's Sporting Goods (DKS).
- H&R Block (HRB), Best Buy (BBY) and Domino's Pizza (DPZ) will attend the three-day Oppenheimer Consumer Growth and E-Commerce conference.
- Merck (MRK), Eli Lilly (LLY), Gilead Sciences (GILD), Biogen (BIIB) and Pfizer (PFE) will speak at the Goldman Sachs Global Healthcare conference.
- Birkenstock (BIRK), Walmart (WMT) and Amer Sports (AS) will hold conversations at the Evercore ISI Consumer & Retail conference.
The IEA will publish its monthly oil market report.