Stock bulls may be feeling a little nervous after Micron Technology’s stock witnessed a selloff in afterhours trading following better-than-expected earnings.

The company easily topped Wall Street estimates for both profit and revenue and delivered forward guidance in-line with expectations. Some think the selloff is classic “buy the rumor, sell the news,” type play and it does follow a significant climb in Micron’s stock price over the past month.

Insiders also suspect that some AI bulls have probably developed unrealistic expectations and were looking for a more spectacular earnings blowout. Tech bulls could struggle to get the recent rally back on track as investors turn attentions back toward economic data and the potential for Federal Reserve interest rate cuts over the next couple of months.

There are three upcoming economic reports that will have a very high impact on Wall Street’s expectations for Fed policy - the PCE Prices Index tomorrow (Friday), the June jobs report next Friday, July 5, and the Consumer Price Index (CPI) on July 11.

The Fed only has four meetings left this year - July 30-31, September 17-18, November 6-7, and December 17-18.

Virtually no one expects a rate cut at the July meeting but incoming data still needs to show that inflation and the job market continue to cool in order for Wall Street to maintain its confidence that rate cuts are going to happen this year. Traders place the odds of a -25 basis point cut happening at the Fed’s September 17-18 meeting at just over 57%. Most think they will hold off on making any changes in November due to the presidential election. That means a second - or the first if the Fed keeps rates on hold in September - probably won’t happen until December.

Today, investors will be digesting Pending Home Sales, the third estimate of Q1 2024 GDP (gross domestic product), and Durable Goods Orders. Earnings today include McCormick & Co., Nike, and Walgreens Boots.

Don’t forget, President Biden and former President Donald Trump are scheduled to participate in the first debate of the 2024 Presidential election tonight. Keep in mind, the Democratic and Republican parties have not even officially nominated their respective candidates yet, meaning we’re entering the thick of the election cycle earlier than ever. Some think Trump might announce his Vice President pick ahead of the debate. Wall Street will be paying attention to things that are policy related but it seems unlikely that Presidential politics is going to have much impact on market sentiment this far ahead of the election. Typically, Wall Street really doesn’t care who is in office so long as it is divided between parties, with a Democrat in the White House and Republicans controlling Congress, or vice versa. Things could be different this time around though, considering the growing concerns about both candidates’ age. Lots to think about...  

Top US Banks All Pass "Stress Test" - All 31 of the largest US banks passed the Federal Reserve’s yearly so-called stress tests, satisfying regulators that they could withstand a theoretical scenario in which unemployment rose to 10% during a severe recession lasting a little over two years. In addition, the baseline stress scenario involved a -40% decline in commercial real estate prices, a substantial rise in office vacancies, and a -36% fall in housing prices. Source Financial Times

This Summer's "Funflation" Effect:  Even while carrying $1.13 trillion in credit card debt, many Americans are still willing to splurge on travel and entertainment. But this summer it will cost even more thanks to “funflation,” a term economists use to explain the increasing price tags of live events as consumers hanker for the experiences they lost during the Covid years. It’s hard to overstate the impact of the pandemic. It changed the way so many people view their spending, and the result is that people are more focused on the right now than thinking about 40 years from now, said Matt Schulz, chief credit analyst at LendingTree. Admission prices for sporting events jumped +21.7% in May 2024 from a year earlier, according to the Bureau of Labor Statistics’ consumer price index data. The category saw the highest annualized inflation rate out of the few hundred that make up the inflation gauge. Admission to movies, theaters, and concerts rose a relatively modest +3% on an annualized basis. Despite rising costs, 38% of adults said they plan to take on more debt to travel, dine out, and see live entertainment in the months ahead, according to a report by Bankrate. Source CNBC

Silver Is Beating Its Metallic Cousins and the Markets:  Gold and copper might grab headlines, but silver is one of 2024’s best-performing commodities, up +21% year to date. But many investors are seemingly shunning the gray metal. Most silver bullion and silver-mining stock exchange-traded funds have net outflows year to date, according to Morningstar data, while U.S. Mint silver bullion coin sales are 1.34 million ounces, less than half of 2023’s sales of 3.4 million ounces through June. It’s their loss. Silver is trading around $30 an ounce, its highest level since 2012, despite a seemingly tough fundamental backdrop for precious metals, high interest rates, tapering inflation, a strong stock market, and a still-growing U.S. economy. The Silver Institute, an industry group, said industrial demand in 2023 reached a record, noting a +64% jump in demand from the solar-panel industry in 2023. The group expects 2024 usage to rise another +20%. That aligns with data from the Solar Energy Industries Association, which reported that the U.S. solar market saw its second-largest quarter of installed capacity in the first quarter, just behind the record set in 2023’s fourth quarter, led by utility installations. Options to own silver are limited. Aside from physical bars and coins, there are only a handful of non-leveraged/inverse ETFs available. The biggest silver-backed ETF is the $13.2 billion iShares Silver Trust, while the biggest silver-miner ETF is the $1.1 billion Global X Silver Miners, up 24% and 11%, respectively, in 2024.  Source Barrons

US New Home Supply the Highest Since 2008 Housing Bust: The inventory of new US homes stands at the highest since the bursting of the housing bubble more than a decade ago, raising the risk that builders will dial back production in a market longing for cheaper borrowing costs. The total number of one-family homes for sale rose to 481,000 in May, the highest since 2008, according to fresh government data released Wednesday. Nearly 100,000 of those have already been completed and are still awaiting a buyer, the most in more than 14 years. At the current sales rate, it would take 9.3 months — the longest since 2022 — to exhaust total inventory. As the industry and potential homebuyers anxiously await cheaper borrowing costs that would help improve affordability, these figures pose a risk to the outlook for residential construction. The Commerce Department’s latest data on new building activity showed beginning construction of single-family homes has already started to shift into a lower gear. An annualized 982,000 one-family houses were started in May, the slowest pace since October. The median new house price fell -0.9% from a year ago, and nearly half of the new homes sold last month were priced under $399,000.  Source Bloomberg

Amazon to Launch Discount Store: Amazon hosted a closed-door event for sellers in China, where it presented plans for a new budget storefront that features low-cost apparel, home goods, and other items. The storefront would directly compete with Temu and Shein, two emerging e-commerce sites with ties to China that have grown in popularity in the U.S. It’s unclear when Amazon intends to debut the storefront, but the presentation notes it will start accepting products this fall. Amazon’s storefront will feature a range of unbranded items, many priced under $20, according to a presentation to Amazon sellers viewed by CNBC. A mock-up of the storefront showed a gua sha facial massaging tool, arm weights and phone cases, among other items for sale. Souce CNBC

SpaceX Scores $843 Million Contract to De-Orbit ISS: NASA has selected SpaceX to develop a spacecraft that will de-orbit the International Space Station in 2030 — a contract valued at as much as $843 million, the agency announced Wednesday. The ISS is nearing the end of its operational life, and as plans for new, commercially owned space stations heat up, the one that started it all will eventually have to be safely disposed of at the end of the decade. Few details about the U.S. Deorbit Vehicle, as NASA calls the craft, have been released so far. However, NASA clarified that the vehicle will be different from SpaceX’s Dragon capsule, which delivers cargo and crew to the station, and other vehicles that perform services for the agency. Both the vehicle and the ISS will destructively break up as they reenter the atmosphere, and one of the big tasks ahead for SpaceX is to ensure that the station reenters in a way that endangers no populated areas.  Source TechCrunch

NBC Will Use Legendary Broadcaster’s A.I.-Generated Voice For Paris Olympics: NBC Universal will use an A.I.-generated version of longtime sports play-by-play broadcaster Al Michaels in its summer Olympics coverage in Paris, the media conglomerate announced Wednesday, bringing artificial intelligence to the games—with the help of a 79-year-old known for years as one of the biggest voices of the Olympics. Michaels himself will not appear at the Paris Olympics, though fans will be able to hear an artificially-generated version of Michael’s voice through NBC’s Peacock app. NBC will use Michaels’ artificially generated voice in its highlight reel, which the outlet calls “Your Daily Olympic Recap,” a feature of its app where viewers can enter their names and favorite Olympic sports for personalized coverage. Michaels said in an NBC statement he was “skeptical but obviously curious” when the artificial intelligence idea was first raised, but said “I’m in” once he heard a demonstration.  Source Forbes

Scientists Create Creepy Robot Face with Real Human Skin Cells: Scientists have unveiled a humanoid robot face they created from lab-grown, self-healing human skin. The researchers from the University of Tokyo, Japan, hope the breakthrough could one day prove "useful in the cosmetics industry and to help train plastic surgeons," per a statement announcing the breakthrough. For the study, published in Cell Reports Physical Science on Tuesday, the researchers created the artificial skin using living cells in a lab — resulting in a 3D facial mold and 2D skin robot. The scientists mimicked human skin ligaments "predominantly composed of collagen and elastin" with "diminutive connecting tissues that anchor the skin to the underlying tissues," per the study.  Source Axios

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