Impact of debates on investors, stock market analytics, fundamental news

• Investors kept a close eye on the first US presidential debate between Democratic President Joe Biden and his Republican rival Donald Trump in the early hours of Asia time on Friday as they clashed on stage ahead of the November US election. Biden, his voice hoarse from a cold, visibly faltered as Trump said the tariffs would reduce the deficit rather than increase inflation. This means the Federal Reserve will keep rates high for longer, U.S. Treasury yields will remain high and the dollar will remain resilient. Market odds of a Trump victory have dropped slightly since the debate. Following the debate, the dollar rose to a 10-day high against the Mexican peso and rose against other trade-sensitive currencies including the Canadian dollar.

• The main market event will be Friday's release of the US Prime Consumer Expenditures (PCE) price index, the Federal Reserve's preferred measure of inflation. The core PCE price index is expected to rise 2.6% year-on-year in May, down from 2.8% in April. If the data matches forecasts, it will likely strengthen bets that the Fed will begin its easing cycle in September.

• Top managers of banks and financial organizations in China began to limit their salaries, they also stopped giving bonuses - Bloomberg/ The stratification of society in China has reached the level of African countries. When a minority bathes in luxury, and millions live on subsistence farming.

• Bolivia: The revolution did not happen, General Zúñiga was arrested.

• According to the final estimate, US GDP in the 1st quarter grew slightly more than expected.
Growth of 1.4% y/y versus expectations of 1.3%.
The deflator remained 3.1% y/y.
Jobless Claims Hold Stable - US Labor Market OK
Larry Summers says the US economy looks healthy and AI is set to bring "profound" changes.

• The Fed's Bowman is willing to vote to raise rates if inflation does NOT fall. This is a toughening of the position. After all, we are talking about raising Fed rates even if inflation remains at the current level of about 3%.
It sounds like - until the US economy goes into recession, the Fed will not calm down.

• Hedge funds are dumping tech stocks despite their recent gains, Goldman Sachs says. Net sales of technology stocks by hedge funds in June could be the largest ever, analysts say.

• A mechanic at subcontractor Boeing (BA) repeatedly filed complaints about poor quality workmanship on the 787 Dreamliner and was fired for this - CNN. According to the TV channel, Strom mechanic Richard Cuevas said he witnessed holes drilled incorrectly in the nose baffles on three aircraft.

• YouTube is in talks with music labels to license songs. The negotiations take place against the backdrop of the growing influence of artificial intelligence.
The video site needs content from labels to legally train AI song generators, three sources said. YouTube is preparing to launch new tools this year.

• SpaceX to sell shares for $112 per share in tender offer - Bloomberg. This is higher than expected. The company's value will reach up to $210 billion.
The company was last valued at $180 billion in a deal that took place in December.

• Walgreens (WBA) cuts earnings per share forecast, plans to close more pharmacies. The company could close thousands of pharmacies in the United States.
“We are at a point where the current pharma model is not sustainable and challenges in our operating environment require us to approach the market differently.” The reimbursement rates they receive from pharmaceutical benefit managers for the prescription drugs they sell have plummeted.

• WBA shares fell 22% yesterday.

• Super Micro (SMCI) could soon replace Walgreens in the Nasdaq 100. Walgreens now makes up about 0.05% of the index and has the smallest market capitalization in the index, half the size required.

• JD Power's annual survey shows that Tesla is inferior in quality to GM and Ford. Stellantis' (STLA) Dodge Ram brand took first place, up from second place in 2023.

• Wall Street got another sign that investment banking is picking up steam. Financial group Jefferies reported results that beat expectations and encouraged investors, a good sign for big Wall Street banks hoping for a recovery in investment banking.

• The Supreme Court on Thursday stripped the Securities and Exchange Commission (SEC) of a key tool in the fight against securities fraud in a decision that could also have far-reaching consequences for other regulators - AP.
Judges have ruled that people accused of fraud by the Securities and Exchange Commission, which regulates securities markets, have the right to have their cases tried in federal court by a jury. The internal procedures the SEC has used in some civil fraud complaints violate the Constitution, the court said.

• Bloomberg: Oil traders focus on 2025 contracts. Oil rose but remained in a tight range as bullish momentum in broader markets countered weak near-term fundamentals for the commodity, prompting traders to shift their focus to next-year contracts.

• A news nonprofit has sued ChatGPT developer OpenAI and Microsoft for “exploitative” copyright infringement. The Center for Investigative Reporting said Thursday it has sued ChatGPT developer OpenAI and its close business partner Microsoft, opening a new front in the legal battle between the news outlets. It appears that lawsuits against AI companies are becoming a market phenomenon of their own.

• US regulators may approve the launch of spot ETH ETFs by July 4 - Reuters. And $102 billion asset manager VanEck filed to register an ETF on Solana.
Blackrock: Bitcoin is a hedge against geopolitical uncertainty and monetary risk.

• Uber and Lyft drivers will receive a standard minimum wage of $32.50 per hour in Massachusetts.
Shares reacted neutrally to the news. The multi-year trial has ended.
Drivers will also now receive one hour of sick pay for every 30 hours worked, up to a maximum of 40 hours per year. And they will receive a stipend to purchase paid family and medical leave from the government program.
The agreement also requires companies to provide drivers with key information — trip duration, destination and expected earnings — before they agree to travel. UBER dreams of robotaxis.

• Levi Strauss (LEVI) shares fell 15% yesterday. The jeans manufacturer reported poorly. The company confirmed that it expects revenue growth for the financial year to be between 1% and 3%.

• Chewy (CHWY) shares were up 29% yesterday, but ended the day at 0. Because the famous meme trader Roaring Kitten posted an image of a dog on his X. This was his first post since June 17th. And the players saw in it a hint of promotions for an online store of pet products.

• Nike (NKE) shares fall 12% after the report. The company reported mixed results. Nike is suffering from slowing sales growth in key markets, a sluggish product innovation cycle, increasing competition (from On Holding (ONON), New Balance and Hoka) and declining consumer spending in the US.

• Infinera (INFN) shares soared 18% following its $2.3 billion acquisition of Nokia, a deal 28% above Wednesday's closing price.

• Markets were stable yesterday. I would like to note the fall in shares of payment systems. And continued pressure on NVDA after the poor reaction to the MU report (-7%).

• Volatility continues to decline. The dollar is also consistently strong. The yen continues to fall and has consolidated around 161 yen per dollar.
Everything is quiet.

Key events that could impact markets on Friday:
- US core PCE price index (May)
- UK GDP for the first quarter
- Import prices to Germany (May)