What to know today

  • Jerome Powell is on deck.
  • Tim Cook is good at his job.
  • Elon Musk is concerned.
markets

It’s Time To Hear From the Fed

The data isn’t speaking for itself.

Plenty of really smart people think the Federal Reserve should have cut its benchmark interest rate last month.

In a consumption-driven economy, better to be in front of than behind a cooling labor market, is the basic reasoning.

This is an infinitely complex system of incomprehensible total value, where even a “blowout” monthly jobs gain of 272,000 in the context of a workforce of approximately 163 million is indeed a rounding error.

It is wise to take account of as much incoming data as possible before deciding to change course, but even the noisiest data sets are signaling inflation’s boom phase is over.

The Fed’s efforts so far are having measurable effects, and lingering price pressures are the result of factors too far beyond the reach of its policy tools.

And, yet, the overwhelming weight of the available evidence suggests the Federal Open Market Committee won’t get moving today.

That’s the base-case scenario, whatever the 8:30 a.m. ET release of Consumer Price Index data for May reveals.

The FactSet-compiled consensus expectation is for a 0.1 percent month-over-month rise in the CPI, down from 0.3 percent in April, and a 3.4 percent year-over-year rise, consistent with last month.

The consensus expects to see a core CPI print of 0.3 percent month over month, consistent with April, and 3.5 percent year over year, easing from 3.6 percent last month.

Whatever they may be, the numbers are likely to cause a lot of price action.

Average moves for the S&P 500 are 30 percent bigger on CPI days versus non-CPI days.

Fed fund futures markets indicate about a 2 percent chance for a rate cut today. Traders are pricing in an 8 percent chance for a quarter-point cut on July 31.

September 18 is 50-50 right now, November 7 more like 60-40. And there’s a better than 80 percent chance the Fed will cut in December. 

Major equity indexes were generally higher and bond yields were generally lower, price action reflecting a “risk on” attitude ahead of what investors, traders, and speculators expect will be cooler inflation data and a more dovish Fed.

Apple $AAPL stood out during a day otherwise notable for a steep slide for financial services names including JPMorgan Chase & Co. $JPM, which was down 2.63 percent, and American Express $AXP, which was down 3.02 percent.

The iPhone maker was not trading on potential central bank policy moves.

The release of an updated “dot-plot” of the interest-rate policy forecasts of each of the 19 top policymakers has generated some excitement; it only happens four times a year.

Likewise, Fed Chair Jerome Powell will host a post-meeting press conference Wednesday at 2:30 p.m. ET that will surely create some interesting price action.

My curiosity is about his and his colleagues’ views of the US employment situation and the potential negative impact of interest-rate policy divergence between and among central banks.

My guess is by the time the closing bell rings today we’ll still be looking forward to more incoming data.

deep dive

Tech CEOs Talk Shop

It’s not really that simple.

Elon Musk is infamous on his social media platform for his one-word “concerning” quote-posts about content he finds “concerning.”

On Monday, the self-anointed éminence grise of the information age docked up a whole thread plus a direct response denouncing Tim Cook’s artificial intelligence strategy.

The X, Tesla $TSLA, and SpaceX CEO included a threat to ban Apple $AAPL devices from his companies if it “integrates OpenAI at the OS level.”

Musk posted of his concerns for the safety of users’ information, describing the software integration between the two companies “an unacceptable security violation.”

Tesla $TSLA is down more than 30 percent so far in 2024, while Apple $AAPL is up more than 7 percent.

Musk further alleged that Apple has “no clue what’s actually going on.”

Replying directly to a post from Cook, Musk said unless they ““stop this creepy spyware” he’d ban iPhones from his companies’ physical locations.

Musk is one of the original founders of OpenAI, and he had litigation against OpenAI CEO Sam Altman. Musk claimed the company had deviated from its mission to develop artificial intelligence “for the benefit of humanity broadly.”

The plaintiff withdrew his complaint on Tuesday.

And He recently raised $6 billion to fund a potential competitor to OpenAI. Xai’s first product, “Grok,” is meant to compete with ChatGPT.

deep dive |
June 12, 2024

Tech CEOs Talk Shop

INFORMATION TECHNOLOGY

“Apple Intelligence” Already Feels Inevitable

They know how to put together form and function.

Apple $AAPL was rewarded on Tuesday for the big reveal of its comprehensive AI strategy on Monday.

AAPL reached a new all-time intraday high and a new closing high for the first time since December. It traded above $200 for the first time ever, and it’s been up 10 of the last 12 trading days.

AAPL was the top-performing stock in the Dow Jones Industrial Average, the Nasdaq 100, and the S&P 500.

Its market capitalization at the closing bell was $3.176 trillion.

Nvidia $NVDA, down 0.71 percent on the day, is at $2.974 trillion. Microsoft $MSFT, up 1.12 percent, is still No. 1 at $3.216 trillion.

But Apple is gonna make a race of it, and probably a good one.

AAPL was down nearly 2 percent the day its Worldwide Developers Conference opened. 

Tim Cook’s keynote address is working, now, though, as investors, traders, and speculators bid the shares up more than 7 percent on AI Day plus one.

Apple $AAPL was up 7.26 percent on Tuesday, June 11, 2024, the day after CEO Tim Cook revealed the company’s AI strategy at its Worldwide Developers Conference.

From the Research Desk comes word that Wall Street analysts like the taste of Apple’s AI flavor – “Apple Intelligence,” to use the CEO’s new phrase – and its potential to make even more attractive the company’s ubiquitous devices.

A partnership with OpenAI will fill gaps in the company’s homegrown tech.

Dan Ives of Wedbush Securities, a longtime AAPL bull, reiterated his “buy” rating as well as his $275 12-month price target. Ives has never wavered in his support of the company and its stock.

“Apple is taking the right path to implement AI across its ecosystem,” Ives wrote in a note to clients, “while laying out the foundation for the company’s multi-year AI strategy across the strongest installed base of 2.2 billion iOS devices.”

Angelo Zino of CFRA Research also reiterated his “buy” rating and its $210 price target. “We believe Siri received its biggest upgrade ever,” Zino wrote to clients.

Wall Street remains firmly bullish on AAPL: 31 analysts rate the stock a “buy,” 12 rate it a “hold,” and one rates it a “sell.”

The first real benchmark of AAPL’s AI progress will come with the release of the 16th iteration of the iPhone, expected this fall.

This day, it’s good to keep in mind what the good folks at StockTwits said: 

“Three things in life are certain; death, taxes, and $AAPL making new all time highs.

“Congrats to all the long-time bulls!”

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