Wall Street is debating whether stocks can regain any upward momentum amid growing concerns about the impacts of a prolonged, higher interest rate environment.

Investors are also cautious to call an all-clear on the Russia front, with even global leaders still struggling to understand exactly what happened during a possible coup attempt over the weekend.

There are some concerns in the West that Russian President Vladimir is attempting to blame the US and its allies for a rebellion by the mercenary Wagner Group. Others are saying, Yevgeny Prigozhin, the leader of The Wagner Group, is now in Belarus with some of his key mercenaries and in position to the north to start a more strategic invasion of Ukraine.

Who really knows what games are being played? President Biden yesterday made a public statement saying the US and NATO played no role in the event. The major worry on that front is that Putin might use Western involvement as an excuse to expand the war, though military experts see that as highly unlikely considering how ineffective the Russian military has proved to be in Ukraine. The bigger worry is the security of Russia's nuclear arsenal if there is an internal power struggle playing out right inside Russia. There is also a question of what lengths Putin might go to in order to retain power, including using nuclear weapons in Ukraine. There are no signs of any immediate threat but the West also has limited information about what's really happening inside Russia.

Stock bulls are expecting things to calm down after a few days as the media loses interest, in turn giving indexes a chance to begin marching higher again. Q2 earnings season is just around the corner and most bulls expect companies will deliver better-than-expected results, much like Q1.

Most bulls don't believe that corporate margins have been hit as badly as feared thanks largely to the significant declines in many input prices, including transportation and energy. Bears are quick to remind that, even with the S&P 500 technically back in a "bull" market (recovered +20% from its most recent low), that doesn't mean it can't turn around and head south again. Bears are also pointing to history that shows "bull" markets do not typically begin before the Federal Reserve has finished a rate hiking campaign and the economy has entered recession. Bears further argue that the strong probability of at least one more rate hike all but guarantees a recession, and possibly further fallout in the financial sector as banks and other lenders struggle to adjust.

Today, investors will be digesting the S&P Case-Shiller Home Price Index, New Home Sales, Consumer Confidence, Richmond Fed Manufacturing, and Durable Goods Orders. Walgreens and Jefferies Financial are the earnings highlights.

Robinhood Lays Off More Full-Time Employees: Robinhood Markets is cutting about 7% of its full-time staff, the online brokerage’s third round of layoffs in just over a year as the company adjusts to a slowdown in customer trading activity. By the second quarter of 2021—Robinhood’s best, according to public filings—the company boasted more than 21 million monthly active users, who flocked to the app to trade stocks, options and cryptocurrencies. As of May, Robinhood had fewer than 11 million monthly active users. Transaction-based revenue in the first quarter dropped 5% year over year and was more than halved from the first quarter of 2021. Source WSJ

Gen Z Plans on a 40-Year Retirement... Good Luck Say Experts: Gen Z is displaying a striking confidence when it comes to their retirement, according to a recent survey. Not only do Zoomers think they’ll retire at 60 on average, according to the survey from Northwestern Mutual, but 2 in 5 of them also expect to live to 100. They also expect to need just $1.2 million to fund that 40-year retirement, the lowest nest egg estimate among the four adult generations in the survey. The research underscores a striking discrepancy between Gen Z’s expectations versus the reality of their retirement, and financial advisors say those who don’t adjust their outlook or their preparations might be in for a rude awakening. In fact, while they have saved so far on average $35,800 for retirement, almost two-thirds of Gen Z "expect to be financially prepared for retirement, and aren't counting on Social Security to make all this happen. The point that bothers most experts is the total amount that Gen Z thinks they need to save $1.2 million. For comparison’s sake, Americans in their 30s estimated they needed $1.44 million for retirement, while those in their 50s forecast $1.56 million. Source Yahoofinance

UPS Workers Strike Could Look Like "Version 2" of Pandemic Era Shipping Disruptions: You could face longer waits and higher prices for the things you buy if about 340,000 UPS delivery drivers and warehouse workers walk off the job this summer. UPS employees who are represented by the International Brotherhood of Teamsters have voted to authorize a strike. It could happen as soon as August 1 if the union hasn’t reached an agreement with UPS management by then. Points of contention between the Teamsters and UPS management include wages, the scheduling of work shifts, and employee surveillance cameras in trucks. If workers strike, many of the potential effects will sound familiar. During Covid, transportation costs went up, inflation was affected, and products did not arrive on time, recalls Hitendra Chaturvedi, a supply chain management professor at Arizona State University’s business school. If UPS workers were to strike, he says, “just imagine Version 2 of that.” The disruption wouldn’t be as widespread as it was in the Covid era, but a UPS strike would still complicate the lives of the many online shoppers as well as businesses. UPS accounted for 24% of all parcel volume, second only to the Postal Service. Amazon, which has its own delivery service, was responsible for 22% of the total Source Forbes

Banks Face Worst Losses Since 2008 if Central Banks Fail to Tame Inflation: The banking crisis sparked by the collapse of three major U.S. lenders in the spring may be out of the headlines, but it’s not over. The normally staid economists at the Bank for International Settlements, a type of brain trust for the world’s fiat-based monetary system, is not a group prone to employing alarmist language. Yet officials called for an urgent “change in mindset” among advanced economies now that the limits of Keynesian-style expansion fueled by debt has been exhausted. “The global economy is at a critical juncture,” said BIS general manager Agustín Carstens told journalists during the presentation of its annual report. A toxic mixture of soaring inflation not seen since at least the 1970s, as well as historically high public and private debt, cannot be sustained for much longer. “The key challenge is fully taming inflation, and the last mile is typically the hardest,” said Carstens. Should consumer and producer prices remain higher for longer than anticipated, his institution warned, banks face credit losses in a “similar order of magnitude” as during the 2008 global financial crisis. Without referring to failed banks like SVB and First Republic directly by name, the BIS argued even comparatively small institutions can shake confidence in the overall system Source Fortune

Not Even Record July 4 Weekend Travel Will Restore Gasoline Demand: After three pandemic summers, a record number of Americans will hit the highway this July 4th weekend, but even that won’t return the country’s struggling gasoline sector to its pre-Covid peak. More than 43 million motorists will drive 50 miles or more from their homes this Independence Day weekend, according to a forecast from AAA. That’s 4% more than in 2019 and would mark a new record. Several years of pent up demand and lower prices at the pump are largely to thank, with gasoline more than a dollar per gallon cheaper compared to last year. Throw in travel by planes, buses, cruise ships and trains, and holiday travel will hit an all-time high of 50.7 million Americans during the five-day period from Friday, June 30 to Tuesday, July 4, the motor club predicts. But while record driving is good news for gasoline and the refiners who supply it, the widespread adoption of more efficient vehicles means fuel demand nonetheless remains muted — and might never get back to pre-pandemic rates. Last year saw the biggest annual jump in efficiency for US cars in more than a decade, with the average car now getting 33.3 miles on a gallon of fuel, according to preliminary data from the Environmental Protection Agency. Although that’s a plus for the environment, it means fuel use — still almost -5% below the same time in 2019 — in all likelihood will never return to that level again. Source Bloomberg

Amazon Wants to Turn Small Shops Into Delivery Partners: Amazon wants to partner with small businesses, such as bodegas and IT shops, so that they can become delivery partners. The company pays a small fee to small retailers for each package they deliver. With this program, Amazon wants to expand its last-mile delivery network and find new partners who can deliver packages for the e-commerce company. Every day, small partner shops receive packages for customers who live in the area. Shop owners or retail employees will then deliver those packages to Amazon customers. In other words, Amazon wants to turn your florist, dry cleaner or hair salon into small Amazon storage spaces. More importantly, Amazon is always trying to find innovative ways to expand its external workforce. Some small business owners might be looking at ways to supplement their income. Source TechCrunch

59% of Internet Users Already on ChatGPT: A new survey from Bank of America found that ChatGPT has been used by more than half of U.S. internet users, while four out of 10 people surveyed say they now use OpenAI’s chatbot, or search chatbots offered by Google and Microsoft, several times a week. According to the survey, OpenAI’s ChatGPT was the most popular of the three A.I. chatbots that users were asked about, with 59% of respondents using the tool. Microsoft’s Bing is now used by 51% of surveyed internet users, according to BofA, while 31% use Google’s Bard. The survey polled a group of 1,100 U.S. internet users ages 18 to 55, but Bank of America did not provide much detail about the methodology of its survey, other than to note that it was conducted with SurveyMonkey. BofA said that the survey was “biased towards heavy internet users,” without specifying how it defined heavy use. Still, the results provide an early snapshot of how quickly consumers are taking to the new crop of generative A.I. tools. Searching for information and “generating ideas” were the two most common reasons respondents gave for using the tools. Source Fortune

In Tough Car Market, More Americans Turn Toward "Certified Pre-Owned": Americans bought fewer used cars in May than they did one year before. But the number of certified pre-owned (CPO) car sales rose. Overall used car sales fell -3.4% compared to last May. But CPO sales rose +5.6%. The increase comes despite a slow year for CPO sales. Most car sales are used car sales. Most years, Americans buy more than twice as many cars used as new. Buying used lets you pay less and avoid much of the depreciation penalty that robs a new vehicle of significant value early in its life. But a used car can break down and cost significant money to repair. A new car comes with a warranty to help prevent that. CPO cars are the "Goldilocks" option between new and used. CPO cars are usually two to six years old, thoroughly inspected by the dealership that sells them, and have a warranty covering repairs if something goes wrong early in the car’s life. The used car market is challenging in 2023. Overall used car sales are down, and prices are up – the average buyer paid more than $27,000 last month. Source Marketwatch

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