As the second half of 2024 commences, investors are gearing up for a holiday shortened week. The week could be eventful, with the anticipation building towards Friday’s release of the June jobs report, which is expected to provide significant insights into the current state of the labor market. Preceding this, the S&P PMI manufacturing and ISM manufacturing data for June will be disclosed on Monday. Additionally, May’s construction spending figures are also slated for release, potentially impacting market movements.

Europe’s Stoxx 600 index experienced a modest recovery, climbing 0.45% by mid-morning and breaking a streak of four consecutive losses. This uptick was largely fueled by a surge in France’s CAC 40 index, which saw an initial spike of over 2.5%, later stabilizing to a 1.3% increase.

China’s (PMI) for manufacturing held steady at 49.5 over the weekend, mirroring the figure from May and signaling a continuation in the sector’s contraction for the second consecutive month. Meanwhile, Japan’s economic outlook has been adjusted to reflect a deeper downturn than initially reported. The country’s Gross Domestic Product (GDP) for the first quarter was revised downward, showing a contraction of 2.9% year-on-year.

Economic Calendar

Earnings Calendar

There are no notable reports on this Monday.

News & Technicals’

Google is set to make a significant leap in renewable energy investment by partnering with BlackRock to develop a 1 gigawatt solar capacity pipeline in Taiwan. This initiative, announced on Monday, is part of Google’s broader strategy to enhance energy capacity and reduce carbon emissions, particularly in light of the growing demands of the artificial intelligence industry. The collaboration involves a capital investment in Taiwanese solar developer New Green Power, pending regulatory approval, which aims to expedite the construction of a substantial solar infrastructure. A segment of this new solar capacity is designated to supply power to Google’s data centers and cloud region within Taiwan, aligning with the company’s commitment to sustainable operations and its goal of achieving net-zero emissions by 2030. This move not only underscores Google’s dedication to environmental stewardship but also reflects the tech giant’s recognition of the critical role that green energy plays in supporting the technological advancements of the future.

In a strategic move to consolidate its manufacturing process and address ongoing safety concerns, Boeing has announced its intention to acquire fuselage manufacturer Spirit AeroSystems. This decision follows a significant leadership overhaul at Boeing, which was prompted by a serious incident where a door panel detached midflight from a nearly new Boeing 737 Max 9 jet. The acquisition, valued at approximately $4.7 billion, is seen as a step towards improving the quality and safety of Boeing’s aircraft, as both companies have faced challenges in eliminating manufacturing defects on the 737 Max, Boeing’s best-selling aircraft.

Meta, the parent company of Facebook, has come under scrutiny from European Union regulators. On Monday, it was accused of not adhering to the EU’s stringent antitrust regulations concerning its new ad-supported social networking service. This accusation marks a significant challenge for Meta, as it navigates the complex regulatory environment of the EU. The bloc’s antitrust rules are designed to ensure fair competition and prevent any single company from dominating the market to the detriment of consumers and competitors. Meta’s alleged non-compliance could have serious implications, including the possibility of hefty fines and mandatory changes to its business practices. The situation underscores the increasing tension between large tech companies and regulatory bodies, as governments seek to rein in the influence of these digital giants.

As the premarket bulls try to shake off Friday’s whipsaw to kick-off this holiday shortened week, we should expect volume to decline with the early close on Wednesday.  However, expect bursts of price volatility with a Powell speech, FOMC minutes and of course the Friday employment situation report.

Trade Wisely,

Doug

Thursday’s trading session began on a subdued note as stock futures as the market’s reacted earnings reports and market-moving data anticipation. Today investors face a busy morning of earnings and economic reports. Traders are poised to assess the latest data on weekly jobless claims, durable goods orders, pending home sales figures and the latest reading on GDP.

European markets exhibited a cautious stance on Thursday. The pan-European Stoxx 600 index saw a modest decline, edging down by 0.2% as of 11:15 a.m. London time. Media stocks managed to buck the trend, gaining 0.44%, which could suggest a shift in investor focus towards more defensive sectors. On the other hand, the retail sector faced a significant pullback, dropping 1.78%, possibly due to the impact of inflationary pressures on consumer spending and sentiment.

In a significant shift in the currency market, the Japanese yen experienced a substantial depreciation, reaching a nearly 38-year low. Late Wednesday, it plummeted to 160.82 against the U.S. dollar, marking a notable milestone as reported by FactSet. Despite the yen’s weakening, Japan’s domestic economic indicators painted a more robust picture. Retail sales in May outperformed expectations, registering a 3% year-on-year growth, surpassing the anticipated 2% forecasted by a Reuters poll of economists. Meanwhile, China’s economic landscape also showed signs of strength, with industrial profits witnessing a 3.4% increase from January to May.

Economic Calendar

Earnings Calendar

Notable reports for Tuesday before the bell include AYI, APOG, LNN, MCK, SMPL, & WBA.  After the bell include NKE, & ACCD.

News & Technicals’

Micron Technology, a leading chipmaker, experienced a surprising 7% drop in its share value on Wednesday, despite reporting quarterly results that surpassed expectations. This decline occurred even though the company’s revenue guidance met analysts’ estimates, suggesting that other factors may be influencing investor behavior. Over the past year, Micron’s stock has seen a remarkable surge, more than doubling in value, largely attributed to the burgeoning demand for chips in the artificial intelligence sector. This sector’s rapid growth has been a significant driver for the semiconductor industry, with Micron being one of the beneficiaries of this trend. However, the recent dip in share price indicates that even companies at the forefront of technological advancements are not immune to market volatility.

Levi Strauss, the iconic denim brand, encountered a slight setback as it narrowly missed Wall Street’s sales expectations, despite denim’s growing popularity. The company’s Chief Financial Officer expressed concerns, noting that consumers are exercising caution with their spending, particularly regarding discretionary items. This cautious consumer behavior could reflect broader economic trends or a shift in spending priorities. In response to the evolving retail landscape, Levi Strauss has been strategically reducing its dependence on department stores. The brand is expanding its direct-to-consumer channels, including enhancing its own website and brick-and-mortar stores. While this move aims to establish a more direct relationship with customers, it also presents its own set of challenges, such as increased competition in the digital space and the need for strong online user experience.

Wall Street is poised with anticipation for the release of May’s personal consumption expenditures (PCE) price index on Friday, a key indicator of inflation. Investors are hopeful that the report will reveal a softening of inflationary pressures, which could reinforce the possibility of the Federal Reserve reducing interest rates later in the year. Amidst this backdrop, there is an ongoing debate among investors regarding the sustainability of the artificial intelligence (AI) sector’s influence on market performance. As the year progresses, questions arise about whether the AI-driven market rally can maintain its momentum or if a broader range of sectors will need to contribute to market growth. According to strategists surveyed by CNBC Pro, there is a tempered expectation that the S&P 500 will conclude the year with a marginal increase, potentially less than 1% above the current levels. This forecast reflects a cautious outlook on the market’s trajectory in the face of various economic uncertainties.

As we wait with massive data anticipation, remember it doesn’t really matter what the data is, it’s the market reaction that matters.  Unfortunately, being unable to see the future we must be prepared for the possibility of big point gaps and whipsaws as the market tries to price in the new information.  Keep in mind we’re facing the Core PCE number Friday morning so plan for the price volatility and uncertainty to continue.

Trade Wisely,

Doug

The stock market displays some optimism on Wednesday morning, with futures pointing upwards, after the tech giants reverse and the AI hype returns. Investors and analysts alike are now turning their gaze towards the upcoming release of May’s personal consumption expenditures price index on Friday, a key indicator of inflationary trends. Additionally, the traders anticipate earnings from General Mills and Paychex, scheduled for Wednesday morning, while Micron Technology is set to report its earnings later in the day. These events are poised to provide further insights into the economic landscape and potentially influence market trajectories.

European markets experienced a rebound on Wednesday, with stocks climbing and shaking off the pessimism from the previous session’s downturn. However, economic indicators suggest caution; German consumer sentiment is projected to decline in July, halting a four-month streak of gains. Concurrently, French consumer confidence dipped to 89 in June, as reported by the country’s national statistics office.

Australia was lower on the day as the headline inflation rate increased, reaching 4%, a notable rise from April’s 3.6%. However, industry giants like Taiwan Semiconductor Manufacturing Company, SK Hynix, and MediaTek also saw their shares climb by 1.38%, 4%, and 3.25% respectively. These gains underscore the robust demand for semiconductor technology, which is a critical component in a wide array of consumer and industrial products, amidst a challenging inflationary environment.

Economic Calendar

Earnings Calendar

Notable reports for Wednesday before the bell include GIS, PAYX & UNF.  After the bell include MU, AVAV, CNXC, FUL, LEVI, MLKN, & WD.

News & Technicals’

FedEx’s stock experienced a remarkable surge, climbing over 15% after the market closed on Tuesday, following the announcement of their fiscal fourth-quarter results. The company not only exceeded analysts’ expectations in terms of earnings and revenue but also highlighted its ongoing $4 billion cost-cutting initiative, which includes merging its air and ground operations. This strategic move is aimed at streamlining processes and improving efficiency. The positive financial report, coupled with a reduction in capital expenditure, reflects FedEx’s commitment to optimizing its business model and strengthening its market position amidst challenging economic conditions. The after-hours leap in share price is a testament to investor confidence in FedEx’s restructuring efforts and future prospects.

Volkswagen’s strategic move to invest up to $5 billion in the electric vehicle startup Rivian marks a significant shift in the automotive industry’s transition towards sustainable transportation. The initial commitment of $1 billion underscores the confidence Volkswagen has in Rivian’s potential to disrupt the market. The subsequent investment of $4 billion, contingent upon the successful formation of a joint venture, reflects a long-term vision for collaboration and innovation. However, despite this substantial financial backing, Rivian’s stock performance has been underwhelming, with a decline of approximately 49% in 2024. This juxtaposition of robust corporate support against market skepticism highlights the volatile nature of the EV sector and the challenges that new entrants like Rivian face in a rapidly evolving market landscape.

Ooredoo’s recent partnership with Nvidia represents a landmark development for technology in the Middle East. This collaboration, Nvidia’s first significant foray into the region, involves the deployment of thousands of Nvidia’s GPUs across 26 data centers spanning Qatar and five other countries: Kuwait, Oman, Algeria, Tunisia, and the Maldives. While the financial details remain undisclosed, the strategic implications are clear. These powerful GPUs will be instrumental in processing vast quantities of data, fueling AI chatbots and various tools that are crucial to the AI infrastructure of these nations. This move not only enhances Ooredoo’s data capabilities but also signifies the growing importance of AI technology in global telecommunications and the pivotal role of the Middle East in the tech industry’s future.

The QQQ celebrated on Tuesday as the tech giants reverse lead by the AI darling NVDA.  Unfortunately, the DIA and IWM also reversed as the rush back into tech reversed taking way the nice gains of Monday.  I suspect the price volatility will continue as the market focus will soon turn to the looming market-moving data coming Thursday and Friday.  Plan your risk accordingly.

Trade Wisely,

Doug

On Tuesday, stock futures suggested a mixed open, after a sharp NVDA selloff that blead over to other technology stocks.  The result was the most substantial single-day decline of the Nasdaq Composite’s since April. However, shares of Nvidia rebounded, climbing over 3% in overnight price action. This uptick comes on the heels of a previous session where Nvidia’s stock tumbled more than 6%, marking its sharpest drop since April 19, when it plummeted by 10%. The broader semiconductor sector also felt the heat, with companies like Super Micro Computer, Qualcomm, and Broadcom experiencing downward pressure on their stock prices.

European markets faced a downturn on Tuesday, mirroring the negative shift in U.S. market sentiment that marked the beginning of the week. The pan-European Stoxx 600 index, a key benchmark for regional equity performance, was particularly impacted during morning trading hours. The decline was led by the tech and industrial sectors, which saw significant selloffs

In the recent trading session, Japan’s Topix index surged, hitting its highest point in three weeks. Meanwhile, South Korea’s Kosdaq, primarily composed of small-cap stocks, rebounded, ending a three-day losing streak. Contrasting these gains, Mainland China’s CSI 300 experienced a decline, dropping by 0.54% to 3,457.90, marking its lowest level in four months. This downturn for the CSI 300 represents its weakest close since February 28. Despite this, the broader Asia-Pacific markets exhibited an upward trend.

Economic Calendar

Earnings Calendar

Notable reports for Tuesday before the bell include SNX.  After the bell include FDX, PRGS, & WOR.

News & Technicals’

The European Commission, serving as the executive arm of the EU, has issued a preliminary statement indicating that Microsoft may have violated EU antitrust regulations. The concern arises from Microsoft’s practice of integrating its communication and collaboration tool, Teams, with its widely used business productivity suites, Office 365 and Microsoft 365. This integration is seen as potentially restricting competition by not providing consumers with a choice to opt out of Teams when purchasing the software packages. The investigation, which began in July 2023 following a complaint by Slack Technologies, suggests that Microsoft’s bundling of Teams might have unfairly given it a “distribution advantage” over other similar applications. Although Microsoft has begun offering some software bundles without Teams, the European Commission believes these measures are insufficient to fully restore competitive conditions. Microsoft has expressed its willingness to work with the Commission to address these concerns and find solutions that satisfy the regulatory body’s requirements for fair competition.

Airbus, the European aerospace corporation, experienced a notable 9% drop in its share price on Tuesday following an announcement that it would be revising its financial targets downward for the year 2024. The company has adjusted its expectations to forecast lower earnings before interest and taxes (EBIT) and a reduction in the number of commercial aircraft deliveries. Initially, Airbus had set a target of delivering around 800 aircraft; however, this number has now been scaled back to approximately 770. The revision of these targets is attributed to persistent supply chain challenges and unforeseen expenses in the space systems division, which have imposed additional costs amounting to roughly 900 million euros. These issues have compelled Airbus to delay its timeline for increasing the production of its A320 aircraft, further impacting its operational and financial projections for the year. The company’s half-year results, which are keenly anticipated, will be disclosed on July 30, providing further insights into the impact of these adjustments.

According to a recent report by Reuters, the Biden administration is investigating three Chinese telecommunications giants—China Mobile, China Telecom, and China Unicom. The probe is centered on concerns that these state-backed firms could potentially exploit their cloud and internet operations within the United States to allow Beijing access to sensitive American data. The Commerce Department is spearheading the investigation, which has involved subpoenas and risk-based analyses of China Mobile and China Telecom. Despite the companies’ limited presence in the U.S., primarily in cloud services and routing wholesale internet traffic, there is a fear that they could still access Americans’ data. This is significant because telecom regulators have previously barred these firms from providing telephone and retail internet services in the country.

The tech sector is hoping to rebound today after the sharp NVDA selloff worried tech investors spreading the selling other stocks in the sector.  With the GDP and Core PCE on the horizon keep an eye on the Consumer Confidence number which could provide some price volatility.   

Trade Wisely,

Doug

S&P 500 futures point upwards on Thursday morning as the bulls look to extend the one stock that rules them all, NVDA. In addition to monitoring the stock market’s movements, investors are gearing up to dissect a slew of new economic data slated for release in the latter half of the week. Key among these are the initial jobless claims figures and housing starts data, both due this morning.

European stock markets opened on an optimistic note on Thursday morning, buoyed by a series of key monetary policy announcements. The Swiss National Bank (SNB) contributed to the positive sentiment by reducing its policy rate by 0.25 percentage points to 1.25%, marking a cautious yet significant move in its monetary stance. Meanwhile, Norway’s central bank has opted for stability, maintaining its policy interest rate at 4.5%. All eyes in the United Kingdom are now turned towards the Bank of England’s rate decision, which is due later today.

In a day marked by a general downturn in the Asia-Pacific markets, China stood out by maintaining stability in its monetary policy, holding its one- and five-year loan prime rates steady at 3.45% and 3.95%, respectively. On a brighter note, New Zealand’s economy showed signs of resilience, emerging from a technical recession with a 0.2% growth quarter-on-quarter in the initial three months of the year.

Economic Calendar

Earnings Calendar

Notable reports for Thursday before the bell include ACN, CMC, DRI, GMS, JBL, KR, & WGO. After the bell include SWBI.

News & Technicals’

Amid escalating tensions in the Middle East, Hezbollah has issued a stark warning, indicating a stance of no restraint or “no red lines” should a comprehensive conflict break out between Lebanon and Israel. The militant group’s Secretary General, Sayyed Hassan Nasrallah, has publicly claimed that Hezbollah possesses intelligence suggesting Israel is actively engaging in military exercises within Cyprus as a precursor to war with Lebanon. In response to these allegations, Cyprus’ President Nikos Christodoulides has firmly denied any involvement in such hostilities. On Wednesday, he emphasized Cyprus’ neutral position, asserting that the nation is not a participant in the conflict but rather a contributor to the peace process. This statement from the Cypriot leader seeks to clarify the island nation’s role and dispel any misconceptions about its stance amidst the growing regional unrest.

The Swiss National Bank (SNB) has reduced its key interest rate by 25 basis points, bringing it down to 1.25%. This marks the institution’s second rate cut within the year, aligning with the predictions of two-thirds of the economists surveyed by Reuters. The consensus had been leaning towards this exact quarter-percentage-point reduction. Meanwhile, Switzerland’s inflation rate has stabilized at 1.4% in May, following a transient increase the previous month. The SNB forecasts that this inflation rate will maintain a steady average throughout the entirety of 2024. This proactive approach by the SNB reflects its commitment to balancing economic growth with price stability, amidst a landscape of fluctuating global financial conditions.

The mortgage landscape has seen a slight easing this week, as the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances (up to $766,550) experienced a dip to 6.94% from the previous 7.02%. This marginal decrease comes amidst a broader context where mortgage applications for home purchases have shown a modest uptick of 2% over the week. However, this figure still trails by 12% compared to the same period last year, underscoring a year-over-year slowdown in the housing market. Initially, mortgage rates inched higher at the start of the week, but the trend reversed following Tuesday’s announcement of weaker-than-anticipated retail sales data, which prompted a pullback in rates. This fluctuation reflects the ongoing responsiveness of mortgage rates to economic indicators and market dynamics.

Despite its already extended condition NVDA looks to gap higher as the once stock that rules them all becoming the most valuable company in the world last Tuesday.  Leadership in the market is however extremely thin so watch these tech titans careful as a turn lower could a trigger a painful pullback for those chasing in a fear of missing out.

Trade Wisely,

Doug

S&P 500 futures remained relatively unchanged on Tuesday morning, with investors bracing for the release of May’s retail sales data. Consensus suggests a modest increase of 0.2% from April anticipated by economists surveyed by Dow Jones. The day is also set to bring a suite of economic reports, shedding light on industrial production and business inventories. Adding to the uncertainty is, several Federal Reserve officials, including Boston Fed President Susan Collins and Richmond Fed President Tom Barkin, are slated to deliver speeches at various events nationwide.

European stock markets experienced an uptick in Tuesday’s trading session, shaking off the uncertainty that began the week. Investors’ attention is now focused on the upcoming policy rate decision from the Bank of England, scheduled for Thursday. The consensus among economists suggests that the Bank will maintain the current interest rate at 5.25%. This expectation is bolstered by a Reuters poll, where a majority of economists predict that the Bank of England might opt for a rate cut in August.

Asia-Pacific stock markets experienced a significant rebound on Tuesday, buoyed by a positive overnight performance on Wall Street. The upswing came as investors digested the latest interest rate decision from the Reserve Bank of Australia. In response to the central bank’s move, the Australian S&P/ASX 200 index saw a notable increase of 1.01%. Meanwhile, Japan’s Nikkei 225 index recovered from Monday’s nearly 2% drop, rising by 1%. The broader Topix index also enjoyed gains, albeit more modest, finishing 0.58% higher. In South Korea, the Kospi index ascended by 0.72%.

Economic Calendar

Earnings Calendar

Notable reports for Tuesday before the bell include CRMT, CGNT, & PDCO.  After the bell include KBH.

News & Technicals’

Apple is currently under significant scrutiny by the European Union due to several “very serious” concerns related to the Digital Markets Act (DMA), as stated by the EU’s competition chief, Margrethe Vestager, in a CNBC interview on Tuesday. The DMA represents a comprehensive legislative effort to curb the influence of major technology companies. In March, the European Commission, which is the executive branch of the EU, initiated an investigation into Apple’s practices under this new regulation. This probe is part of a broader initiative to ensure that tech giants operate within a framework that promotes fair competition. Vestager has indicated that the findings of this investigation are expected to be disclosed “hopefully soon,” which could have significant implications for Apple’s operations within the European market.

Fisker, the American electric vehicle (EV) manufacturer, has sought bankruptcy protection, a move announced late Monday. The company has been grappling with a swift depletion of funds, primarily due to the costs associated with rolling out its “Ocean” SUVs in both the United States and Europe. In a strategic pivot aimed at addressing its financial woes, Fisker is now looking to sell its assets and restructure its debt under Chapter 11. The decision comes after a thorough review of potential avenues for the business, with the company stating, “After evaluating all options for our business, we determined that proceeding with a sale of our assets under Chapter 11 is the most viable path forward for the company.” This development marks a significant turn for Fisker, as it seeks to navigate through its current challenges and find a sustainable path forward in the competitive EV market.

The Kremlin has confirmed that President Vladimir Putin is set to embark on a ‘friendly state visit’ to the Democratic People’s Republic of Korea (DPRK), accepting an invitation from North Korea’s leader, Kim Jong Un. This announcement, made on Monday, has sparked considerable attention on social media platform X, where videos and images depict the streets of Pyongyang adorned with Russian flags and portraits of Putin, signaling preparations for his anticipated arrival. The visit is drawing scrutiny from geopolitical analysts, with one commenting that the burgeoning relationship between Moscow and Pyongyang represents “a threat like no other” to Western interests. This visit underscores the deepening ties between the two nations and could have far-reaching implications for international relations and security dynamics.

Boeing’s CEO, Dave Calhoun, is set to confront a Senate panel amid escalating concerns over safety and quality control issues plaguing the aircraft manufacturer. The hearing, convened by the Senate Homeland Security Committee’s Permanent Subcommittee on Investigations, is scheduled to commence at 2 p.m. ET on Tuesday. This comes in the wake of a recent incident where a door plug was ejected from a Boeing 737 Max plane mid-flight, an event that has intensified scrutiny on the company. The nearly new aircraft’s mishap in January has put Boeing squarely in the hot seat, as it grapples with the fallout and faces tough questions from lawmakers about its commitment to safety standards.

After Monday’s surge higher it’s likely the retail sales data will determine if the bulls can follow though for another winning day.  Expect price volatility Fed members pontificate interest rates with speaking engagements around the county today.  Remember the market is closed on Wednesday so plan your trading risk accordingly.

Trade Wisely,

Doug

The stock market presented a contrasting performance last week, with the Dow Jones Industrial Average facing a downturn for the third time in four weeks. In contrast, both the S&P 500 and the Nasdaq Composite soared, achieving record highs and marking their seventh week of gains in the recent eight. The upcoming week, however, will see a truncated trading schedule as markets close on Wednesday in observance of the Juneteenth holiday. This pause in trading may offer a moment for investors to reflect on the market’s recent volatility and prepare for the second half of the month.

European markets experienced a downturn on Monday, retracting from initial advances as a wave of pessimism swept through the trading floors. Investors’ focus was largely drawn towards the impending interest rate verdict from the Bank of England, which cast a shadow of uncertainty. By mid-morning, at 11:15 a.m. London time, the Stoxx 600 index had declined by 0.33. The French CAC 40 also succumbed to the negative trend, edging down by 0.14%.

In a recent economic update, the People’s Bank of China maintained its medium-term lending facility rate steady at 2.5% on a substantial 182 billion yuan, aligning with market predictions. Meanwhile, China’s retail sector outperformed analyst forecasts, registering a 3.7% year-on-year increase in May, surpassing the anticipated 3% rise based on a Reuters survey. However, Asian markets closed red across the board.

Economic Calendar

Earnings Calendar

Notable reports for Monday there are no reports before the bell.  After the bell include LEN, & LZB.

News & Technicals’

In an effort to de-escalate mounting tensions along the Lebanon border, a senior U.S. adviser is set to visit Israel. The region has seen an uptick in hostilities, with a recent barrage of missiles intensifying concerns over the possibility of a larger conflict. The Israeli military has cited Hezbollah’s increasing aggression as a critical factor pushing the situation toward a potential escalation. Amos Hochstein, serving as a senior diplomatic adviser to U.S. President Joe Biden’s administration, is scheduled to arrive in Israel on Monday. This visit, reported by an Israeli official to NBC News, is a strategic move to mediate and hopefully reduce the strains that have been building in the volatile border area.

TDK, the renowned Japanese electronic parts manufacturer, announced a significant breakthrough on Monday with the development of a new material designed for solid-state batteries. This Tokyo-based company, also known for supplying components to Apple, highlighted the potential of this innovation to revolutionize personal electronics. The material is particularly suited for devices that are worn close to the body, such as wireless earphones, hearing aids, and smartwatches. A key aspect of TDK’s solid-state battery technology is the incorporation of oxide-based solid electrolytes. This choice of material is not just a technical decision; it’s a commitment to safety, as the company asserts these batteries are “extremely safe.” This advancement could pave the way for more reliable and durable consumer electronics that integrate seamlessly into our daily lives.

In a landmark decision, a judge has sanctioned a $4.5 billion settlement involving Do Kwon, Terraform Labs, and the U.S. Securities and Exchange Commission (SEC). This settlement comes in the wake of Binance’s earlier agreement with the U.S. authorities in November, which amounted to $4.3 billion. These legal resolutions are part of a broader crackdown on illicit activities that shook the foundations of the cryptocurrency sector in 2022. The recent series of criminal convictions and financial penalties signify a turning point, bringing closure to the tumultuous events and holding accountable the individuals whose actions significantly disrupted the crypto industry. This marks a concerted effort by regulatory bodies to restore integrity and stability in the digital asset space.

The future of Social Security benefits hangs in the balance, with projections suggesting a potential across-the-board cut for beneficiaries within the next decade unless Congress intervenes. The legislative body currently appears immobilized, unable to reach a consensus on the path forward. Amidst this deadlock, the proposal of a bipartisan commission has emerged as a possible solution, garnering a polarized response. Advocates argue that such a commission could bridge political divides and forge a sustainable future for Social Security. Conversely, critics fear that it may lead to compromises that could undermine the program’s integrity. This dichotomy of views underscores the complexity of reforming a system that millions of Americans rely on for financial security in retirement.

The contrasting performance with new record highs in the SPY and QQQ with the DIA and IWM show bearish trend makes for considerable uncertainty in this holiday shortened week.  Keep an eye on the dollar breaking recent highs but showing considerable volatility in the overnight session.  With retail sales figures in focus before the bell Tuesday after Friday’s disappointing Consumer Sentiment, plan your risk carefully.

Trade Wisely,

Doug

The S&P 500 futures Thursday, with PPI in focus with a side order of jobs data before the bell. This followed closely on the heels of the Federal Reserve’s latest interest rate decision, which, along with a May consumer inflation report that was more subdued than anticipated. Broadcom stood out with its shares leaping 14% in premarket trading, announcing an enticing 10-for-1 stock split.

European markets faced a downturn on Thursday, with the Stoxx 600 index falling 0.6% by 9:45 a.m. in London, a stark contrast to the robust gains it had secured the previous day. The volatility was particularly pronounced in the case of the French IT giant Atos, whose shares experienced a dramatic 14% drop following the announcement of the divestiture of its consultancy arm, Worldgrid.

Asian markets traded mixed but mostly higher. Leading the charge was South Korea’s Kospi, increased of 0.98%, closing at 2,754.89. Over in Hong Kong, the Hang Seng index also participated in the rally, climbing 0.87%.

Economic Calendar

Earnings Calendar

Notable reports for Thursday before the bell include KFY, SIG, MDRX, & WLY.  After the bell includes ADBE.

News & Technicals’

Elon Musk, CEO of Tesla, has indicated that the company’s shareholders are poised to endorse his contentious $56 billion pay package, alongside a resolution to relocate Tesla’s corporate domicile to Texas. This substantial compensation plan, which was initially ratified in 2018, set forth ambitious benchmarks for Tesla’s financial metrics and valuation. While some detractors have voiced concerns over the enormity of the package and Musk’s potential diversion of focus due to his involvement with other ventures, including a social media platform, proponents maintain that Musk’s leadership and innovative drive are indispensable for Tesla’s continued prosperity and pioneering role in the electric vehicle industry. The debate encapsulates the broader discourse on executive remuneration and the impact of dynamic leadership on corporate success.

The trading landscape for GameStop shares took a dramatic turn on Wednesday afternoon as a significant sell-off ensued. Amidst this market activity, attention was drawn to “Roaring Kitty,” also known as Keith Gill, a prominent figure in the GameStop trading frenzy. The latest disclosure of his investment portfolio revealed on Monday night that he retained ownership of 120,000 call options contracts. These contracts are characterized by a strike price of $20 and are set to expire on June 21. In a remarkable display of market movement, GameStop call options matching Gill’s strike price and expiration date saw a staggering 93,266 contracts being traded on Wednesday, highlighting the volatile nature of the stock and the keen interest of traders in these specific options.

Digital wallets have become a cornerstone in the global payment landscape, as evidenced by their substantial share in both e-commerce and brick-and-mortar transactions. In 2023, digital wallets were responsible for 50% of all e-commerce purchases and 30% of in-store purchases, amassing a staggering $14 trillion in transaction value. This trend is expected to continue its upward trajectory, with projections estimating that digital wallet transactions will reach an impressive $25 trillion by 2027. The Asia-Pacific region, in particular, has embraced this payment method with open arms; 70% of online payments and 50% of in-store payments were conducted through digital wallets last year, the highest adoption rate globally. China is at the forefront of this digital revolution, leading the world with 82% of e-commerce and 66% of in-store purchases made via digital cards, contributing to approximately $7.6 trillion in transactions. This data not only highlights the growing consumer preference for digital wallets but also underscores the significant role they play in shaping the future of financial transactions worldwide.

The wild price volatility and whipsaws could continue this morning with the PPI in focus along with Initial Claims to keep traders guessing. However, big tech continues to surge after the Broadcom reports expecting another new record high in the Nasdaq at the open.    

Trade Wisely,

Doug

The wait is over, and the big data day begins with stock futures putting on a brave face ahead of May’s CPI report and the Federal Reserve’s decision. Meanwhile, Oracle saw its shares surge by 9%, who were more enthused by the company’s announcement of new cloud computing agreements with tech giants Google and OpenAI than concerned by the earnings shortfall reported in Oracle’s most recent quarterly results.

European markets also moved higher ahead of the decision from the U.S. Federal Reserve and the release of the latest inflation data. This positive sentiment comes despite the economic stagnation in the U.K., where growth remained static in April, due to a persistent decline in construction.

China’s inflation rate was recorded at 0.3%, falling short of the anticipated 0.4% forecasted by a Reuters poll. This discrepancy points to a slower-than-expected rise in prices, which could signal a variety of economic factors at play, including subdued consumer demand or government policies aimed at controlling inflation. Meanwhile, Japan experienced a notable uptick in its corporate goods inflation rate, which climbed to 2.4% in May. This increase exceeded market expectations and represented the most rapid escalation since August, indicating heightened cost pressures within the corporate sector.

Economic Calendar

Earnings Calendar

Notable reports for Wednesday there are no notable reports before the bell today.  After the bell include AVGO, PLAY, OXM, & CURV.

News & Technicals’

The European Union announced on Wednesday a significant policy shift, deciding to levy increased tariffs on Chinese electric vehicles. According to the EU’s statement, a substantial 38.1% tariff will be applied to battery electric vehicle (BEV) manufacturers from China who failed to participate in the EU’s investigation. Conversely, for those Chinese carmakers who did cooperate with the inquiry but were not selected for “sampling,” a reduced tariff rate of 21% will be imposed. This move underscores the EU’s stringent stance on trade compliance and reflects the growing scrutiny over the competitive practices of the electric vehicle industry, which is central to the global shift towards sustainable transportation.

The upcoming launch of a new headset in China is poised to make a notable entry into the market with a premium pricing strategy. This device will feature applications from local developers, harnessing the technological prowess of Chinese powerhouses such as Tencent and ByteDance. The strategic decision to host apps from these tech giants could enhance the headset’s appeal within the domestic market. Furthermore, the headset’s accelerated entry into international markets, sooner than initially anticipated, may be indicative of a strategic pivot. An analyst suggests that this move could be a response to a tepid demand within the U.S. market, prompting the company to seek growth opportunities elsewhere. This development reflects the dynamic nature of the global tech industry, where consumer interest and market demand can significantly influence product rollouts and pricing decisions.

Amazon Web Services (AWS) is set to expand its global infrastructure footprint by establishing a new region in Taiwan by early 2025. This strategic move is aimed at catering to the high demand for cloud services in the Asia-Pacific region, a testament to the area’s burgeoning digital economy. AWS’s commitment to Taiwan is further underscored by its plan to invest billions of dollars over the next 15 years, signifying a long-term investment in the technological advancement and digital transformation of the region. This announcement follows closely on the heels of AWS’s recent declaration to infuse an additional $9 billion into Singapore, reinforcing its dedication to enhancing cloud infrastructure and services across the Asia-Pacific. These investments reflect AWS’s confidence in the region’s potential and its role as a pivotal hub in the global cloud services landscape.

Wednesday presents a significant day for economic news, beginning with the crucial consumer price index (CPI) reading for May in the morning. This indicator is a key measure of inflation, reflecting changes in the cost of living by tracking the prices paid by consumers for goods and services. The outcome of this reading could have substantial implications for market expectations and economic forecasting. The day concludes with the Federal Reserve’s policy meeting in the afternoon, an event that holds the financial world’s attention. Decisions made during this meeting, particularly regarding interest rates, are pivotal for the economy and can influence everything from consumer spending to business investment. Together, these events form a potent combination that could set the tone for financial markets and economic policies in the coming months.

Anything is possible as traders and investors react to the big data day with a lot at stake.  Keep a close eye on the reaction in bond yields and be prepared for sharp price reactions in the indexes.  I would not rule significant point whipsaws as the market reacts so take caution in those quick fear of missing out trades.

Trade Wisely,

Doug

Traders become cautious as they turn their gaze towards the beginning of the Federal Reserve’s policy meeting in June, and the pending CPI report before the bell Wednesday. This tentative atmosphere follows a day, where both the S&P 500 and Nasdaq Composite managed to eke out modest gains, achieving new record highs, while the Dow Jones index also advanced, albeit marginally, by nearly 0.2%.

European markets faced a downturn on Tuesday, with impending release of U.S. inflation figures. Despite a brief respite from Monday’s bearish mood, the Stoxx 600 index succumbed to selling pressure, dipping 0.7% by 11 a.m. in London. The downward trend was pervasive across all sectors. Meanwhile, the UK’s wage growth remained steadfast at 6%, inflationary trend worries investors.

Asia-Pacific activities were somewhat subdued due to the closure of key Asian markets, including those in Australia, mainland China, Hong Kong, and Taiwan, in observance of local holidays. As the week unfolds, investor attention is set to pivot towards Japan, with the nation’s first-quarter Gross Domestic Product (GDP) figures slated for release on Monday. Additionally, anticipation is building for the Bank of Japan’s interest rate decision on Friday, which could signal shifts in monetary.

Economic Calendar

Earnings Calendar

Notable reports for Tuesday before the bell include ASO.  After the bell include ORCL & CASY.

News & Technicals’

In a surprising turn of events, the U.K. witnessed a slight increase in unemployment rates during the period from February to April, reaching the highest point recorded since September 2021. This unexpected shift has brought the issue of wage growth into sharp focus, particularly as it pertains to earnings excluding bonuses, which have maintained a steady rate of 6%. This persistent wage inflation is seen as a “lingering concern” for the Bank of England, which is currently deliberating the appropriate timing for a reduction in interest rates. Economists are closely monitoring this situation, as the interplay between unemployment and wage growth is critical in shaping the bank’s monetary policy decisions. The central bank’s challenge lies in balancing the need to support economic growth while also containing inflationary pressures, a task made even more complex by the current labor market dynamics.

The European Union is poised to announce interim tariff rates for Chinese electric vehicles, a move that could significantly alter the competitive landscape. Analysts from Citi have projected that the tariff could escalate to approximately 25-30%, a substantial increase from the current rate of 10%. Moreover, there’s a 40% chance that the rates could soar even higher, to between 30-50%. This potential hike reflects the EU’s strategic adjustments in response to the growing presence of Chinese automakers within its borders, many of which are establishing manufacturing plants in Europe. According to Anthony Sassine, a senior investment strategist at KraneShares, the establishment of these factories offers alternative pathways for Chinese automakers, likely accompanied by behind-the-scenes negotiations. His comments, made on CNBC’s “Squawk Box Asia,” underscore the dynamic interplay between trade policies and the automotive industry’s evolving global footprint.

The United Auto Workers (UAW) finds itself under scrutiny as its President, Shawn Fain, becomes the subject of an investigation led by a federal court-appointed monitor. The inquiry, spearheaded by Neil Barofsky, delves into allegations that Fain may have overstepped the bounds of his authority as union president. This probe is set against the backdrop of a 2020 consent decree that was established between the UAW and the U.S. Department of Justice, aiming to ensure proper conduct within the union’s leadership. The timing of this investigation coincides with a critical juncture for the UAW, as it is currently engaged in a significant national campaign to organize workers at nonunion automaker facilities. The outcome of this investigation could have far-reaching implications for the union’s future endeavors and its leadership’s credibility.

With the uncertainty of the pending data traders become cautious as the overnight price action tries to erase most if not all of yesterday’s bullish efforts.  Implied volatility hints of possible big point moves in the indexes after the data is revealed so beware of overtrading and have a plan to protect your capital before the days end. 

Trade Wisely,

Doug