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Many Wall Street insiders remain worried about the nosebleed levels some of the biggest tech companies have reached - Apple, Microsoft, and Nvidia are each now valued at over $3 trillion. Some analysts have targets as high as $10 trillion for Nvidia, with each estimate seemingly trying to outdo the other. Bears continue to warn that the hype is getting ahead of the results and believe earnings from the dominant tech companies will struggle to sustain the dazzling profits they’ve notched in recent quarters.
Many bears also think Wall Street is ignoring signs of a weakening US economy. Bears yesterday were pointing to signs of soft demand in the May Producer Price Index (PPI) as well as an unexpected jump in weekly unemployment claims.
Economic data today includes Consumer Sentiment and Import/Export Prices. Looking to next week, remember that stock, bond, and commodities markets are closed on Wednesday, June 19, for the “Juneteenth” holiday. The mid-week break could make for an unusual trading week, though it’s tough to predict - this is only the third year markets have closed for "Juneteenth". Traders typically like to take time off around holidays so there could be some low volume volatility added to the mix.
The data calendar next week includes Retail Sales, Industrial Production, and Business Inventories on Tuesday; Housing Starts & Permits on Thursday; and Existing Home Sales on Friday.
On the earnings front, things will be very slow with just Lennar on Monday; Accenture, Darden Restaurants, and Kroger on Thursday; and CarMax and FactSet on Friday. For what it’s worth, the next big “AI” earnings result will be Micron Technology on June 26, which will also wrap up the big US company results for Q1 2024. The Q2 2024 earnings season kicks off in about a month on July 12.
Wall Street futures pull back as markets eye cautious Fed
NEW Chinese Megaport in South America Is Rattling Some US Leaders: In Chancay, Peru on South America’s Pacific coast, China is building a megaport that could challenge U.S. influence in a resource-rich region that Washington has long considered its backyard. The Chancay deep-water port, rising here among pelicans and fishermen in small wooden boats, is important enough to Beijing that Chinese leader Xi Jinping is expected to inaugurate it at the end of the year in his first trip to the continent since the pandemic. Majority-owned by the giant China Ocean Shipping group, known as Cosco, Chancay promises to speed trade between Asia and South America, eventually benefiting customers as far away as Brazil with shorter sailing times across the Pacific for everything from blueberries to copper. As nations around the world shudder at a new flood of cheap Chinese manufactured goods, the port could open new markets for its electric vehicles and other exports. China is already the top trade partner for most of South America. The U.S. worries that China’s control over what could become South America’s first true global commercial hub will allow Beijing to further strengthen its grip over the region’s resources, deepen its influence among America’s closest neighbors and eventually plant its military nearby. Located 50 miles north of Peru’s capital, Lima, the $3.5 billion port—funded by Chinese bank loans—will be the first on South America’s Pacific coast able to receive megaships because of its nearly 60 feet of depth. Chancay is an echo of a Cosco port in Greece in 2016 that gave China a foothold in southern Europe. Today, Chinese companies control or operate terminals at roughly 100 foreign seaports. According to AidData, a research lab at the Virginia University William & Mary, they have financed almost $30 billion of work in at least 46 countries between 2000 and 2021. Source WSJ
Shippers Fear Ocean Freight Rates Could Test Pandemic Peaks: Rising freight rates are a new source of concern in the global supply chain with forecasts warning that ocean cargo prices could reach $20,000 — potentially even touch the Covid era peak of $30,000 — and stay there into 2025. Spot ocean freight rates from the Far East to the U.S. popped between 36%-41% month over month, and ocean carriers increased additional charges known as general rate increases by roughly 140%, according to the CNBC Supply Chain Heat Map. These costs have taken the price of a 40-foot cargo container to about $12,000. Shippers are frustrated by the sharp turn in supply chain pricing. Peter Boockvar, chief investment officer at Bleakley Financial Group, said the global economy is in a new world of inflation volatility, even as the Fed’s latest comments and Consumer Price Index data in the U.S. showed progress on disinflation. “The spike in ocean shipping rates, along with air is a reminder of this,” Boockvar said. “We’ve seen in the past goods prices can easily be reversed upward. Higher for longer rates are real.” Nate Herman, senior vice president of policy at the American Apparel and Footwear Association, wrote in an email that in May the market saw low demand, with container bookings down 48% and ample supply with vessel capacity up 2.6%, “but yet carrier general rates exploded with up to a 140 percent increase! Shippers are paying sky-high rates as a direct result of schemes that ignore existing contracts.” Source CNBC
Russia Suspends Dollar, Euro Trade on Flagship Stock Exchange: Russia halted trading in U.S. dollars, the euro and Hong Kong dollars on the country’s flagship stock exchange Thursday after the U.S. imposed fresh sanctions aimed at further tightening the screws on Moscow’s war machine. The Bank of Russia said trading sessions in the foreign-exchange, precious metals and derivative markets of the Moscow Stock Exchange with settlements in those currencies had been suspended due to U.S. sanctions. However, currency trading will continue in the over-the-counter market—when two parties engage directly without supervision from an exchange. The U.S. Treasury sanctioned the Moscow exchange and Russia’s central securities depository that provides bank account services, registration of over-the-counter trades, and liquidity management services. “We are increasing the risk for financial institutions dealing with Russia’s war economy and eliminating paths for evasion, and diminishing Russia’s ability to benefit from access to foreign technology, equipment, software, and IT services,” Treasury Secretary Janet Yellen said in a statement. Source WSJ
Largest US Oil Trade Group Sues Biden Admin Over EV Push: The nation's largest oil trade group, which includes Exxon Mobil and Chevron filed a federal lawsuit on Thursday seeking to block the Biden administration's efforts to reduce planet-warming emissions from cars and light trucks and encourage electric vehicle manufacturing. The U.S. Environmental Protection Agency issued new tailpipe emission rules in March that will force automakers to produce and sell more electric vehicles to meet the new standards. Under the rule, the administration projects up to 56% of all car sales will be electric between 2030 and 2032. The American Petroleum Institute (API) says the EPA has exceeded its congressional authority with a regulation that will eliminate most new gas cars and traditional hybrids from the U.S. market in less than a decade. The National Corn Growers Association and the American Farm Bureau Federation will join API as co-petitioners, along with six auto dealers representing 16 brands and collectively operating dozens of dealerships across the country. Source Reuters
Record Florida Rainfall Could Cost Over $1 Billion In Damages: The heavy rainfall and flooding in southern Florida could end up costing the state more than $1 billion, Bloomberg reported Thursday, as a state of emergency has been declared by Gov. Ron DeSantis—and more rain is forecast to batter the region Thursday afternoon. DeSantis declared a state of emergency for multiple counties on Wednesday, including Broward, Collier, Lee, Miami-Dade and Sarasota—and Miami-Dade County Mayor Daniella Levine Cava also declared a local state of emergency. Southern Florida saw 20 inches of rain in less than 24 hours on Wednesday, according to Accuweather, which said the rainfall is “double the historical average rainfall for all of June.” Several states in the southern parts of the U.S., including Florida and Louisiana, have also experienced record-breaking heat over the past several weeks. The heat, which shows no signs of slowing down in some areas, also has experts predicting a record-breaking forecast of 17 to 25 tropical storms and hurricanes this year. Source Forbes
New Chinese Megaport in South America Is Rattling the U.S.: In the town of Chancay, Peru, China is building a megaport that could challenge U.S. influence in a resource-rich region that Washington has long considered its backyard. The Chancay deep-water port is important enough to Beijing that Chinese leader Xi Jinping is expected to inaugurate it at the end of the year in his first trip to the continent since the pandemic. Majority-owned by the giant China Ocean Shipping group, known as Cosco, Chancay promises to speed trade between Asia and South America, eventually benefiting customers as far away as Brazil with shorter sailing times across the Pacific for everything from blueberries to copper. The U.S. worries that China’s control over what could become South America’s first true global commercial hub will allow Beijing to further strengthen its grip over the region’s resources, deepen its influence among America’s closest neighbors and eventually plant its military nearby. Located 50 miles north of Peru’s capital, Lima, the $3.5 billion port—funded by Chinese bank loans—will be the first on South America’s Pacific coast able to receive megaships because of its nearly 60 feet of depth, though other ports in the region have large container-handling capacity. Chancay is an echo of a Cosco port in Greece in 2016 that gave China a foothold in southern Europe. Today, Chinese companies control or operate terminals at roughly 100 foreign seaports. According to AidData, a research lab at the Virginia university William & Mary, they have financed almost $30 billion of work in at least 46 countries between 2000 and 2021. Source WSJ
Red Lobster Looks to New Wall Street Savior After Prior Woes -
To all you fathers, HAPPY FATHERS DAY!!!!!!!
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