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🍋 One Rate Cut It Is
The Fed is dialing back on their rate cut plans for this year. Instead of the three slashes they had hoped for in March, they're now eyeing just one cut. Why? Because inflation is still dragging its feet towards the 2% goal.
Short Squeez
June 13, 2024
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"The key to making money in stocks is not to get scared out of them." — Suze Orman
Good Morning! Apple momentarily surpassed Microsoft as the world's most valuable company, soaring 10% in the last two days. Wall Street CEOs Dimon, Fraser, and Moynihan are anticipated to attend a private meeting with Trump today. Tesla shareholders are concluding their vote on Elon Musk's $56 billion pay package, with Elon hinting at a win last night. Following activist pressure, CEO of Southwest Airlines will implement changes. Plus Citron closed its GameStop short position but why this meme stock frenzy is different than 2021.
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SQUEEZ OF THE DAY
One Rate Cut It Is
The Fed is dialing back on their rate cut plans for this year. Instead of the three slashes they had hoped for in March, they're now eyeing just one cut. Why? Because inflation is still dragging its feet towards the 2% goal.
This revelation comes straight from the Federal Reserve's latest economic projections, dropped right after their June 11-12 meeting. They decided to leave the policy rate at between 5.25%-5.5%.
Looking ahead to 2025, the Fed's crystal ball shows a policy rate settling at 4.1%. So that means you can expect four more quarter-point cuts next year.
Back in March, the Fed was singing a different tune, forecasting three cuts in both 2024 and 2025, aiming for a 3.75% - 4% range by the end of next year. But thanks to some stubborn inflation and an economy that is a lot more resilient than expected, they’ve hit the brakes on cutting rates.
The Fed has been trying to squeeze inflation without wrecking the job market. And in the latest projections, it seems there's a split in the ranks. Four policymakers are in the "no cuts this year" camp, up from two in March. Meanwhile, seven think a single cut will suffice by year's end, while eight are still hoping for two.
Takeaway: The Fed is playing it cautious with just one rate cut expected this year. Inflation is just dragging its feet, and the Fed’s trying to figure out the best course of action. At the same time, investors largely shook off the news yesterday, with stocks still closing at record highs.
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HEADLINES
Top Reads
Apple briefly overtakes Microsoft as the world’s most valuable company (YF)
What changed in the new Fed statement (CNBC)
Dimon, Fraser and Moynihan will attend private Trump CEO meeting (CNBC)
X makes likes private (Slate)
Why this meme stock frenzy is different than 2021 (CNN)
Citron Research closes GameStop short position (YF)
Inflation slowed for the second straight month (Axios)
Roaring Kitty has some tough choices to make on his GameStop options (CNBC)
Tesla’s shareholder vote is about more than Elon Musk’s money (Axios)
Southwest CEO vows change amid activist pressure (CNBC)
GameStop raised $2B by selling shares, capitalizing on meme frenzy (CNBC)
The political pressure on Powell is heating up (YF)
CAPITAL PULSE
Markets Rundown
S&P 500, Nasdaq post-closing record highs after CPI, Fed.
Movers & Shakers
(+) Oracle ($ORCL) +13% after announcing cloud deals with Google and OpenAI.
(+) Taiwan Semiconductor Manufacturing ($TSM) +4% after Bank of America hiked its price target.
(–) Celsius ($CELH) -6% after a sales slowdown.
Private Dealmaking
National Bank of Canada bought Canadian Western Bank for $3.6 billion
KKR bought an $850 million stake in Quick Quack Car Wash
General Motors will invest $850 million into Cruise, the robotaxi and self-driving business
AlphaSense, a market intelligence platform, raised $650 million and buys Tegus
Alten bought Worldgrid, an energy provider, for $292 million
FLO, an EV charging network operator, raised $136 million
For more PE, VC & M&A deals, subscribe to our Buysiders newsletter.
BOOK OF THE DAY
How To Listen When Markets Speak
From Wall Street to the White House, the fantasy of an eventual “return to normal” is still alive and well, nurtured by dangerously outdated theories. But the economic world as we know it—and the rules that govern it—are over.
In the coming decade, we’ll witness sustained inflation, a series of sovereign and corporate debt crises, and a thundering of capital out of financial assets into hard assets.
Few are prepared.
Lawrence G. McDonald, founder of the economic research platform The Bear Traps Report, got a real-world education in market risk when, as a Lehman Brothers VP, he watched the firm ignore flashing warning signs before its collapse.
His analysis led him to identify twenty-one indicators for gauging the health of an economy and detecting early signals of opportunity and danger.
In How to Listen When Markets Speak, McDonald unveils his unique predictive models, connecting surprising dots between past, present, and future and outlining actionable trading ideas for staying a beat ahead of the markets.
“A New York Times bestselling author and leading expert on market risk argues that seismic shifts in the global economy will trigger a multi-trillion-dollar migration of wealth, outlining new rules of investing for the forward-thinking.”
DAILY VISUAL
Nvidia Responsible for over 1/3rd of S&P 500 Gain
Source: Apollo
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DAILY ACUMEN
Work Overload
In today's fast-paced work environment, managing stress and avoiding burnout are essential for maintaining both mental and physical health.
Shanna B. Tiayon's latest insights from her book "Burnout Immunity" highlight the importance of building resilience through emotional intelligence.
By developing self-awareness, self-regulation, meaningful connections, a positive mindset, and a proactive approach to recovery, individuals can protect themselves from the detrimental effects of chronic stress.
These strategies not only enhance personal well-being but also contribute to a more compassionate and productive workplace.
Taking regular breaks, fostering supportive relationships, and aligning work with personal values are key practices to sustain long-term health and happiness in any professional setting.
ENLIGHTENMENT
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MEME-A-PALOOZA
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