Inflation in England and the USA, stock market news and company analytics
• Investors will get another chance to see if the global deflation story gains even more interest as UK inflation data takes center stage on Wednesday. However, its results cannot significantly influence the Bank of England's policy review the next day. Headline inflation in May is expected to be 2% year on year, in line with the Bank of England's target, following April's 2.3%, with prices falling as a result of lower household energy bills. But the central bank is widely expected to keep rates unchanged as policymakers focus on rising wages and services sector inflation, which is estimated at 5.5% in May. Data last week showed UK wages rose faster than forecast, putting pressure on the central bank to keep rates high for longer. Inflation figures and subsequent policy decisions will provide investors with some clarity ahead of the UK general election in July, with the FTSE 100 index down 3% since hitting a record high in May.
• Last week's tepid U.S. inflation reading came hours before a generally hawkish stance from Federal Reserve officials, who cut their average forecast for a three-quarters point rate cut to one within a year. With US markets closed, trading may be sluggish throughout the day. These data slightly raised expectations for a rate cut in September, although given the Fed's dependence on data, these expectations will be volatile in the near term. At the beginning of the year, traders forecast a 160 basis point rate cut in 2024, but now expect a 48 basis point easing.
• The US Congressional Budget Office (CBO) raised its 2024 budget deficit forecast from $1.5 trillion to $1.9 trillion.
In 2034, the US national debt will rise to 122% of GDP.
The CBO expects the US economy to slow to 2% in 2024-25 and 1.8% in 2026-34 and beyond.
• The IMF will establish a regional center in Shanghai to stimulate research in the Asia-Pacific region.
The new regional center will facilitate research and provide policy proposals to emerging markets and middle-income countries, the IMF and the People's Bank of China said in a joint statement on Wednesday.
The IMF was afraid of China's intensification of work with developing countries and since it could not win, it decided to lead the process.
• Japan's exports rose for the sixth month in a row, driven by automobiles and chip equipment. The weak yen helps even more.
Exports grew by 13.5% y/y.
The main growth drivers were supplies to the USA (+23.9% y/y) and China (+17.8% y/y).
Imports rose 9.5% in May due to increased supplies of refined products and crude oil.
• NVDA rose in price yesterday, while MSFT and AAPL fell in price. As a result, Nvidia became the largest company in the world for the first time.
• The XLK ETF will be forced to buy $10 billion of Nvidia shares on Friday while selling $11 billion of AAPL shares - a quarterly rebalancing. As a result, NVDA and AAPL's shares in XLK will be almost equal at 21-22%.
• Trump Media & Technology Group (DJT) shares fell 10% yesterday and are down another 14% in post-market trading. The SEC has allowed some of its investors to exercise warrants on the shares, which could increase their supply.
Directors, officers and Trump himself, who owns roughly two-thirds of the company's outstanding shares, remain subject to a lock-up period and are currently prohibited from selling shares.
• Telegram launched TON Dating, the first dating service developed on the TON blockchain.
The application has an algorithm for combating anonymous people and bots, as well as the ability to receive TON for the time spent in the service.
• American billionaire Warren Buffett is reducing his stake in China's largest electric vehicle maker BYD - Reuters
Berkshire sold 1.3 million BYD shares listed in Hong Kong for HK$310.5 million ($40 million).
Berkshire Hathaway is instead buying more shares of Occidental Petroleum (OXY).
• Bacon McFlurry: McDonald's has ditched artificial intelligence for ordering. McDonald's is removing AI ordering technology from its US restaurants after customers shared comic mishaps online.
• Are automakers retreating from their ambitious plans for electric vehicles? The latest data from S&P Mobility shows EV inventories at the end of April were up 5.7% from the previous month and 105% from a year ago.
This is despite significant discounts on electric vehicles for most of the year.
• Apple is pausing work on its next expensive headset. To focus on the cheaper model – Information.
• Tesla must respond to a lawsuit from owners who claim it monopolizes car repairs and parts.
A US judge said Tesla car owners could file a class-action lawsuit accusing billionaire Elon Musk's company of monopolizing the repair and parts markets.
• African private equity fund (AIIM) is in talks with BlackRock and others to sell stake in renewable energy - Bloomberg.
• A "volatile mortgage rate environment" worsened Lennar's margin outlook. Lennar (LEN) shares fell 5% after its third-quarter residential gross profit forecast disappointed investors.
The company forecast gross margin of 23% for the period, below analysts' estimates of 24%, according to Bloomberg data.
• A disappointing retail sales report "shows strain from higher interest rates and housing spending continues to fall in May," Oxford Economics said in a research note released early Tuesday.
• Fund managers are the most optimistic in years, with
73% saying they don't expect a global recession, according to BofA research.
6% of respondents forecast a weak economy, up from 9% last month.
• And again the price of AI stocks increased.
• Weak retail sales data helped US government bonds rise.
Separately, we note the increase in oil prices by 1%.
• The US economy is clearly cooling. Investors are preparing for the Fed's first rate cut in September. The breadth of growth in the stock market warns of the instability of optimistic sentiment - the market is growing only on AI stocks, while classic businesses are under pressure and there is no demand for Value stocks yet.
• There is a big expiration on Friday, and today is a day off. And the elections are getting closer. The calm times may end quickly.
Today
- US stock markets will be closed in connection with the celebration of National Independence Day, dedicated to the emancipation of slaves.
- Rocket Lab (RKLB) plans to launch an Electron rocket on the "No Time Toulouse" mission, the first of five dedicated flights on behalf of French Internet of Things company Kinéis.
- Pure Storage (PSTG) CEO Charlie Giancarlo will be the keynote speaker at the company's Pure//Accelerate conference.
- The National Association of Home Builders will publish the housing market index for June.