Jim’s Notes – More New Highs

Moving the Market – June 11th

The markets traded to new highs for the second day awaiting key data reports due Wednesday. The markets gapped lower to start the day and rallied to the end. Apple was center stage again with the response to the Developer’s conference as investors and Wall Street mulled the details. Tim Cook defined the new software as a move beyond AI and into “personal intelligence”. The new features offer the personalization to perform tasks with apps on your behalf. The kicker was it will only be available on iPhone 15 Pro and newer… thus the upgrades are coming. That equals money to Apple. Renewed outlook for the stock as a result and up 7% on the day. Despite the lackluster announcement about the technology the dollars make sense. There was more speculation on what the Fed will do at Wednesday’s FOMC meeting. The consensus is now one cut prior to the year’s end. The wait is over and the fun begins. It was the first day for NVDA trading following their 10 for 1 split and the stock was down 0.8%. LUV got a $1.9 billion investment from Elliott Management as they want changes to grow the airline back to best in class. Ten-year treasury auction was a success with stronger demand internationally. One would assume that the Fed was involved in that somehow… nonetheless, the yield fell 6 bps and TLT moved back above the 200-day MA. All said, a positive day for the major indices but the path higher was narrow. Taking what is offered as we wade into the data reports on Wednesday.

The major indexes closed the day higher as technology led the move. The volume was above average and all three indices closed in positive territory. The activity started lower and then the buyers stepped in to push the broad indexes into positive territory at the close. Tuesday the NASDAQ closed up 0.8%, DIA was down 0.3%, and the SP500 was up 0.2%. The major indexes closed higher on the day. The SOXX was down 0.05%. Small Caps (Russell 2000) were down 0.6%. The ten-year treasury yield was 4.40% down 6 bps for the day. Crude Oil (USO) was up 0.07%. (UGA) was up 0.09%. Natural gas (UNG) was up 6.6%. The dollar was up 0.1%. Plenty to deal with moving forward as we manage our money and emotions relative to the current environment.

Wednesday Outlook: The focus remains on Wednesday with the FOMC meeting conclusion and the CPI data for May. Needless to say, plenty of economic data to hopefully provide some clarity with the Fed and interest rates. At least enough to end the speculation and offer some direction near term for stocks. Buy on the rumor, sell on the news… may well apply to the day assuming things go according to estimates. There is plenty of speculation that CPI will be higher than many expect upsetting the markets and sending the dollar higher. The market is acting differently… the activity says all is well… The key is to follow the trends up or down we will see who is right soon enough. 1) Watching the dollar as it relates to Wednesday’s news. 2) Interest rates moved to 4.40% on Tuesday… Watching the response on Wednesday. 3) Crude oil bounced on Monday by 3.3%. Flat on Tuesday. 4) Natural gas remains volatile gaining 6.6% on Tuesday. 5) DBA showing some volatility as well in the consolidation pattern. 6) The answers are unfolding… we have to take what is offered up or down.

Headlines Worthy of Note:

Big oil warned by the IEA that peak crude is on the horizon. The estimate from the IEA is that oil will gradually slow before reaching a peak of 106 million barrels per day in 2030. If this is true oil companies will be at risk relative to their exposure… thus, the current diversification by many of the major oil companies.

Oracle shares jump on AI deal with Google and OpenAI. There seems to be a common theme in stock movement… announce a deal or new development around AI and your stock runs. By the way, Oracle missed earnings and still ran 11% after hours on the news.

What to expect from the CPI and FOMC data today… this article lays out what is expected… worthy of the read. The end result will be how investors interpret the news based on their collective beliefs. Thus, my theory is that we all have beliefs about the markets, but they move based on the collective beliefs of all investors.

Quote of the Day: “You cannot shake hands with a clenched fist.” — Indira Ghandhi.

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