Moderate stock market optimism with the Fed and the ECB, news from Google, Tesla, Figma and cryptocurrencies

• Powell's announcement that the US was back on a "disinflationary path" was enough to put the dollar on the defensive and Treasury yields lower, although he warned more data was needed before rates could be considered. “We just want to understand that the levels we're seeing are a true reflection of what's actually happening with core inflation,” Powell said at a conference in Portugal sponsored by the European Central Bank. So, the Fed remains data-driven, making the next few inflation indicators critical to determining where U.S. rates will go by the end of the year. Traders cling to two rate cuts this year from the Fed

. • Powell was optimistic about the Fed's fight against inflation. Expects a return to 2% at the end of 2025 or 2026. And another interesting thing: “The level of US national debt cannot be maintained. Something needs to be done.”

• Meanwhile, the ECB remains in no hurry to cut borrowing costs further after cutting rates last month, and data on Tuesday showed a key component of euro zone inflation in the services sector remained stubbornly high. The ECB's Christine Lagarde and Philip Lane are due to take the stage in Portugal and may make comments that could influence markets' expectations for rates. Traders are currently pricing in 43 basis points of cuts this year from the ECB.

• The US labor market remains strong. The number of JOLTS vacancies unexpectedly increased from 8.059 million to 8.14 million. A drop to 7.96 million people was expected.

• The Eurozone economy is stable. Unemployment is expectedly stable at 6.4%. Inflation expectedly fell from 2.9% to 2.8% y/y, and core inflation from 2.6% to 2.5% y/y.

• Fed member Goolsby sees troubling signs in the real economy. "I'm seeing some worrying signs that the real economy is weakening," Goolsby told CNBC on the sidelines of a European Central Bank conference in Portugal.

• Clogged bank balance sheets led to a jump in the key repo rate. The key rate, tied to the financial system's daily borrowing needs, hit its highest level since the start of the year as large settlements at Treasury auctions and clogged primary dealer balance sheets constrained lending capacity.

• More and more German companies are becoming involved in the production and supply of military equipment and services. Shares in engine maker Deutz jumped more than 20% last week, according to the FT, after it said it would make tank engines alongside its motorcycle business.

• Huawei decided to compete with the Mercedes-Benz S-Class - the company showed a luxury presidential-level sedan Stelato S9. The car is designed to compete with German premium cars, but is completely electric.

• Figma is disabling an AI design feature that appeared to copy Apple's Weather app. Figma CEO Dylan Field said the company would temporarily disable the "Create a Design" AI feature that was alleged to have copied the design of Apple's Weather app. The problem was first noticed by Andy Allen, founder of NotBoring Software, which develops a software package that includes the popular Weather application and other skinning utilities.

• Google misses important climate goal, citing artificial intelligence's electricity needs - AP. Three years ago, Google laid out an ambitious plan to combat climate change by achieving "net zero," meaning that by 2030 it would not put more climate-changing gases into the air than it takes out of it. Instead of decreasing, its emissions rose 13% in 2023 compared to the previous year. Compared to the base year 2019, emissions increased by 48%.
Google attributes last year's growth in AI to demand for data centers, which require huge amounts of electricity.

• In corporate news, Tesla on Tuesday reported a smaller-than-expected 5% drop in vehicle deliveries in the second quarter as price cuts and the electric vehicle maker's incentives helped soften demand for cooling. Although electric vehicle manufacturers, not just Tesla, still face challenges along the way. Tesla beat estimates thanks to a less sharp decline in electric vehicle sales. Tesla's second-consecutive drop in quarterly deliveries was not as sharp as analysts had predicted, sending shares of the electric vehicle maker soaring 10%.

• Shares of Novo Nordisk and Eli Lilly fell on Tuesday. US President Joe Biden has demanded price reductions for their blockbuster weight loss and diabetes drugs.

• Ivanhoe Mines will sell the zinc it produces from a major new mine in the Democratic Republic of Congo to Trafigura Group and China's Citic Metal Co.

• Robinhood is considering offering cryptocurrency futures in the US and Europe, Bloomberg reports. The commission-free trading app hopes to leverage licenses from cryptocurrency exchange Bitstamp, which it agreed to buy last month in a $200 million deal, once the deal closes soon.

• The US will pay Moderna $176 million to develop an mRNA vaccine against pandemic flu. The US government will pay vaccine maker Moderna $176 million to speed up development of a pandemic flu vaccine that could be used to treat avian flu in humans, as concerns grow about cases of illness in dairy cows across the country, federal officials announced.

• Stellantis will invest an additional $55 million in air taxi maker Archer. The latest investment follows the automaker's open market purchase of 8.3 million Archer shares in March, making Stellantis the largest shareholder in the electric vertical.

• Fundstrat's Tom Lee confirmed his forecast for Bitcoin to reach $150K at the end of 2024.

• U.S. new vehicle sales barely rose in the second quarter (+0.1% YoY) in the second quarter as buyers dissatisfied with prices
Dealer inventories are rising, especially for pickup trucks and other high-end vehicles. Many people buy some inexpensive cars that cost around $20,000 and the rest are under $30,000.

• The stock market rose slightly yesterday - traditional optimism before the 4th of July.
The growth leader was TSLA (+10%).
Bitcoin prices have returned below $61 thousand.

Today
- The three-day Droidcon Berlin conference for Android developers begins in Berlin.
- ASLAN Pharmaceuticals (ASLN) shares will begin trading with a reverse ADS split of 1 to 8.
- May production orders report.
- President of the Federal Reserve Bank of New York John Williams will speak at the ECB Forum.
- The EIA report on crude oil inventories is expected to attract more attention than usual.
- US stock markets will close early ahead of Independence Day celebrations.
- The Fed will publish the minutes of the June FOMC meeting.