MARKET WRAP

Equities were kind of volatile intraday, reacting to a steady stream of headlines—some real, some false—leaking out of the ongoing U.S.-China trade talks in London. A midday drop tested the SPX 6,000 level (after a misleading report) , but stocks rallied several times late in the day on more "talks going well" leaks. On the Day, SPX +0.6%, QQQ +0.7% and IWM +0.6%. For the second straight day, it was very quiet outside of equities. The US10YY was barely red, now 4.47%, Gold also barely red, and Oil pulled back slightly as well, now back below $65. DXY closed just above $99. Tomorrow morning is the CPI, more on that below.

After hours: SPY and QQQ are both (very) slightly lower after hours.

• MRKT Call: Guy and Dan dive into the latest headlines, where we are in this rally and whether it can be trusted here, the FOMC’s next moves and a look at sector performance. 

• RiskReversal Pod: Danny Moses Joins Dan to discuss the upcoming Fed meeting, energy, oil and more. Gene Munster joins to talk Apple’s disappointing WWDC, and a look ahead at Tesla’s robotaxi event.

MRKT MATRIX: TODAY’S TOP STORIES

• S&P 500 rises for a third day as traders hope for progress on U.S.-China trade talks (CNBC)

• Apple’s WWDC underwhelms on AI, but software gets biggest facelift in over a decade (CNBC)

• OpenAI claims to have hit $10B in annual revenue (TechCrunch)

• News Sites Are Getting Crushed by Google’s New AI Tools (WSJ)

• Zuckerberg Is Personally Recruiting New ‘Superintelligence’ AI Team at Meta (Bloomberg)

• Huawei Founder Waves Off Chip Curbs as Trade Talks Proceed (Bloomberg)

• TSMC’s May Revenue Surges 40% in Sign of Resilient AI Demand (Bloomberg)

• Wary Wall Street Positioning Leaves Room for S&P 500 to Rally (Bloomberg)

• Popular US Treasury Bet Risks Being Next Pain Trade, BNP Warns (Bloomberg)

WHAT’S NEXT?

There’s seemingly unshakeable bid under the market right now, largely driven by the consensus assumption that stocks complete the last bit of the rally to prior highs. But it feels like there’s a secondary dynamic intraday, that of a trigger happy short-covering dynamic worried about getting caught on the wrong side of a US/China announcement. That also raises the question of whether a non definitive headline out of London could create a “sell the news” moment. Obviously, it depends what that headline looks like! If it appears that most of the big issues are resolved it would obviously be very bullish, but something something that kicks the can down the road? Something to keep in mind when the news finally hits. 

Speaking of news, looking ahead to tomorrow morning’s CPI print, consensus expectations are for headline inflation to rise 2.5% year-over-year (with a 2.4% institutional median), up from April’s 2.3%. One interesting thing to note, the Fed’s CPI Nowcast sees a milder 0.13% month-over-month print—below Bloomberg’s 0.2% MoM consensus estimate.

Wednesday Jun 11th

• Pre-market: CHWY 9%

• 8:30am - CPI

• 2pm - US Monthly Budget Statement

• After Hours: ORCL 7%

Expected Moves:

• SPX 0.7%

• QQQ 0.9%

• TLT 0.7%

TODAY’S EPISODES

Watch MRKT Call’s newest episode: The Big Concern With This S&P 500 Rally: What Investors Need To Know

• Analysis: SPX, US10YY, DXY, BX, F, GM, DIS, TSM, AVGO, SOXX, T, VZ, TMUS, INTC

• Rosenberg Research: SP 500 Asset management group still -13% below its highs

• Carter Worth Charting: Fade the Semis

• Your Questions Answered:

  • You cats ever trade the UVXY when the VIX gets low? 

  • Do you buy stocks like Telcos for dividend yield?

  • Bessent talk to replace Powell, to the “shadow Fed” talk. This can’t instill confidence in the dollar. Thoughts Guy?

Learn more about our sponsor, FactSet.

Watch RiskReversal Podcast’s newest episode: WWDC Disappointment: Is Apple Rotten to the Core with Gene Munster

Dan Nathan and Danny Moses discuss current market trends and insights on the Risk Reversal Podcast. They touch on the forthcoming Fed meeting, including predictions about interest rates and economic projections. They also explore the impact of AI, regional banks’ underperformance, and consumer credit. Additionally, they examine the state of the energy sector and the potential for oil price movements. After the break, Gene Munster of Deepwater Asset Management joins to discuss the recent Apple WWDC event, focusing on its less impressive hardware announcements and the introduction of new operating system features. They explore Apple's strategic moves related to AI, including the Foundation Model framework aimed at enhancing AI capabilities for developers. The conversation also highlights Apple's efforts to align its devices more closely while addressing the challenges its facing due to competition from OpenAI and regulatory hurdles. Additionally, they touch on Tesla's RoboTaxi initiative and its potential impact on the company's brand and market performance.

Learn more about our sponsor Current and RBC Capital Markets.

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