Stock investors are anxious to see today's earnings report from Micron Technology after the market closes. There are hopes that strong results could reignite the AI-driven tech rally that has been under pressure recently amid some rotation out of the sector.

While most on Wall Street expect the company to easily beat expectations, the bigger question is whether the results will be good enough to quash longer-term worries that stock prices for some key AI companies have climbed too far, too fast.

Investors won’t get another look at big tech earnings until Q2 2024 earnings season in late July.

General Mills, Jeffries Financial, Levi Strauss, and Paychex also report today. Wall Street was surprised yesterday by better-than-expected results from FedEx. Notably, FedEx reported an uptick in its ground delivery segment, indicating that the decline in consumers’ online shopping is moderating.

Investors today are also anxious to see results of the Federal Reserve’s annual bank “stress test” exercise, which is designed to determine whether big banks have enough capital to withstand a negative economic shock. The results directly affect how much banks can return to investors via dividends and stock buybacks. Results for the big Wall Street banks like JPMorgan ChaseBank of America, and Goldman Sachs typically draw the most interest but smaller lenders will likely draw equal attention again this year with investors still concerned about the stability of regional and mid-sized banks.

On the data front, New Home Sales is the key release. It’s worth noting that the Case-Shiller Home Price Index yesterday showed April home price rose by +6.3% year-over-year. Thirteen of the 20 largest markets are at new all-time highs. The report follows Existing Home Sales on Monday that showed another decline in the pace of sales, while median prices still managed to climb to a new record high.

The relentless rise in home prices remains a major concern for inflation and Fed rate cuts. From where I sit, it doesn't sound like the Fed is ready to cut rates anytime real soon, and when they do start cutting it might just be a very slow process of one or two cuts per year, as long as the US economy doesn't fall fully apart...

We start the final leg into the 2024 presidential election. The first debate is scheduled for tomorrow night at 8:00pm CST and can be seen on CNN, with the 78 year old former President Donald Trump squaring off against the 81 year old current President Joe Biden. 

US Corporate Stockpiles Soar to Record $4.11 Trillion:  US companies added to their cash accounts in the first quarter, sending holdings to a record $4.11 trillion as a resilient economy and relatively high interest rates helped boost returns. Holdings rose 12.6% from the prior-year period, and were $1.28 trillion above their pre-Covid baseline, according to a recent analysis of the Federal Reserve’s quarterly flow of funds by treasury advisory firm Carfang Group. Corporate cash piles have been on an upward slope since the beginning of the pandemic, with the economy’s continuing strength allowing companies to sock more money away and generate returns on short-term holdings. Even with the Fed poised to start easing monetary policy later this year, investments in cash equivalents remain attractive and can be an appealing safeguard to protect against any future slowdown. Time deposits went up 46.7% from the year-ago quarter, while money-market fund holdings rose 12.4%, the analysis shows. Checkable deposits saw a smaller increase of 8.9% compared with the same period last year.  Source YahooFinance

China Thought to be Moving Ahead in Space Race with US:  There is a new space race, this time between the U.S. and China. On Tuesday, China took an important step forward. A Chinese spacecraft touched down on grasslands in China’s Inner Mongolia region, carrying the first-ever rock samples from the far side of the moon. A scientific breakthrough in itself, the success also advanced China’s plan to put astronauts on the moon by 2030 and build a lunar base by 2035. Such momentum is worrying American space officials and lawmakers, who have their own ambitions to build moon bases. Unlike the original space race between the Americans and the Soviets, the goal of the U.S. and China isn’t just to make a short trip to the moon. It is to build permanent human outposts on its most strategic location, the lunar south pole. And as both nations gear up to build stations there one day, it is looking likely that tensions in orbit will mirror those on Earth. Some U.S. officials fear China is planning a land grab. Chinese officials suspect the same of the Americans and are teaming up with Russia and other friendly nations for its south-pole outpost. The outlines of a lunar iron curtain, in which rival superpowers and their allies jockey to exploit the moon’s strategic importance, are already emerging.  Source WSJ

Amazon Prime Day Scheduled July 16 and 17: Amazon’s Prime Day mega sale event will return on July 16 and 17, the company announced Tuesday. Like in previous years, Amazon said the event will feature millions of deals, with new discounts dropping “as often as every five minutes during select periods throughout the event.”The company said it will once again offer invite-only deals for which members of its Prime subscription club can request an invitation to access discounts on items that typically sell out fast. It first rolled out invite-only deals for Prime members last year. The discount bonanza is partially designed to attract new Prime subscribers, to promote Amazon’s products and services and to provide a sales boost during a normally slower shopping period. The event is also a big revenue driver for other retailers, who often hold competing events during or around Prime Day. Walmart on Tuesday announced its own “Walmart Deals” event that runs July 8 through July 11, while Target said it would host a weeklong discount event from July 7 to 13. Best Buy is also running a “Black Friday in July” promotion from July 15 to 17. Source CNBC

Warren Buffett’s Candy Company Is Trying to Scoop the Competition: Warren Buffett has seen all kinds of mergers in his time, but here’s a sweet deal that’s a first even for him: See’s Candies is getting into ice cream. The iconic candy company, owned by Buffett’s Berkshire Hathaway is launching a limited-time collaboration with McConnell’s Fine Ice Creams, a 75-year old Santa Barbara, Calif.-based company, starting this Friday—just days before July, which is national ice cream month. Buffett famously munches See’s peanut brittle on stage at the company’s annual meeting. Flavors will be available at McConnell’s scoop shops but can also be bought nationwide online for $12 per pint. If the joint venture seems to be working, the rollout might be extended to grocery stores where McConnell’s is sold. See’s, which was founded in 1921, once served ice cream in its candy shops but hasn’t in decades. It currently has over 250 shops across America and a robust online business. Source Barrons

Disney World Will Take Ride Reservations a Week in Advance: Disney Genie+ is going away at Walt Disney World, sort of. Starting July 24, Genie+ will be called Lightning Lane Multi Pass, and Individual Lightning Lanes will be called Lightning Lane Single Passes, but that’s not the biggest change. Beginning that same day, guests will be able to reserve rides and shows as much as seven days ahead of time instead of having to wait for park days. The Lightning Lane Multi Pass will include the same attractions currently covered by Genie+ as well as Tiana’s Bayou Adventure, which opens on June 28. Á la carte Lightning Lane Single Passes will be available for the most popular attractions at each park, like Individual Lightning Lanes. Guests staying at Disney World’s resort hotels can make selections up to seven days in advance, all at once, for up to 14 days of their stay. Other guests can make selections up to three days in advance.  Source USA Today

Housing Market to Remain “Stuck” Until At Least 2026: The housing market is unlikely to recover for several years and affordability won’t get any better unless a recession hits, according to Bank of America economists. In a mostly pessimistic outlook on the sector, the bank sees a variety of factors lining up against both a major improvement in sales and a drop in prices that would bring younger buyers back into the market. Among them are pandemic-related factors that saw a rush of buyers come into the market around 2020 and 2021, driving a dramatic spike in sales and coinciding with an inflation burst that goosed interest rates. Sales have largely been on a downtrend since. “The US housing market is stuck, and we are not convinced it will become unstuck anytime soon,” Bank of America economist Michael Gapen and others said in a Monday note. “We view the forces that have reduced affordability, created a lock-in effect for homeowners, and limited housing activity will remain in place through our forecast horizon,” he added. The affordability situation won’t change “without a recession,” Gapen wrote. Existing home sales have plummeted since early 2021 when they were at a seasonally adjusted annual rate of 6.6 million, according to the National Association of Realtors. In May, that number tumbled to 4.11 million. Prices, though, have been slow to come down. The median price of an existing home sold last month was $419,300, according to the NAR, compared with $283,600 in May 2020. Source CNBC

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