Macro Matters

Fed Diverges From Global Peers in New Era of Higher for Longer

The Federal Reserve is bucking the global trend by signaling a more conservative approach to interest rate cuts, with officials now expecting just one reduction this year—a downshift from the three cuts forecasted in March—and projecting that rates won't fall as low as previously thought, suggesting that higher interest rates are here to stay. This stance stands in stark contrast to actions taken by other major central banks like the Bank of Canada and the European Central Bank, both of which have recently lowered their rates by 25 basis points, and the Swiss National Bank, which initiated its own cut earlier in March.

US Producer Prices Surprise With Biggest Decline Since October

US producer prices unexpectedly declined in May by the most in seven months, another welcome development that will strengthen the Federal Reserve’s confidence in moderating inflation.

The producer price index for final demand decreased 0.2% from a month earlier, lower than all estimates in a Bloomberg survey of economists. Compared with a year ago, the PPI rose 2.2%, Bureau of Labor Statistics data showed Thursday.

BOJ Triggers Yen Slump With Lack of Detail on Bond Buying Cuts

Investors were caught off guard when the Bank of Japan (BOJ) held off on providing specifics about reducing its bond-buying program until its July meeting, a move that contributed to a further drop in the yen and prompted traders to scale back expectations for an interest rate hike in the near future. Despite predictions from economists that the BOJ would start tapering its purchases, the central bank's decision to delay details signaled a slower return to normal monetary policy. Meanwhile, the BOJ's move to keep the benchmark rate steady was anticipated, but the yen still fell to its lowest against the dollar since April, yields on 10-year government bonds decreased, and Japanese stocks managed to climb, bucking the downtrend in other Asian markets.

Smart Money Flow

Bonds Are Beating Bitcoin as Doubts Gather Over Crypto Rebound

This quarter has seen traditional investments like stocks and bonds outperform Bitcoin, suggesting that the cryptocurrency's surge may be losing momentum. Bitcoin has dipped around 5% since April began, trailing behind global equity, bond, and commodity indices, and even gold has outpaced the digital currency. Despite reaching an all-time high of $73,798 in March, Bitcoin's attempts to rally back to that level have fallen short. Enthusiasm for factors that once boosted Bitcoin, such as US Bitcoin ETF inflows and hopes for Fed rate cuts, now seems to wane, failing to reignite the strong market sentiment previously observed.

Net long positions in gold futures are hovering at the highest levels since 1986.

Small caps are historically cheap on various metrics.

Top Corporate News

Apple Tops Microsoft in Value After Best 3-Day Run Since 2020

Apple has reclaimed its crown as the world's most valuable company, surpassing Microsoft with a market cap of $3.285 trillion after a strong rally fueled by investor optimism about its growth prospects and positioning in artificial intelligence. The tech giant's market value edged past Microsoft's $3.282 trillion, marking the first time Apple has come out on top since January. With its biggest three-day jump since August 2020, Apple has bounced back from recently ranking third behind Nvidia, reflecting Wall Street's dynamic leaderboard. According to Rhys Williams of Wayve Capital Management, the market is favoring companies that are expected to lead in AI, suggesting that Apple and Microsoft, along with Nvidia, may continue to vie closely for the top spot.

Broadcom Beats Earnings Estimates, Announces 10-for-1 Stock Split

Broadcom delivered a strong performance in its second fiscal quarter, surpassing Wall Street's expectations with an adjusted earnings per share of $10.96, beating the forecast of $10.84, and a revenue of $12.49 billion, compared to the anticipated $12.03 billion. The company's announcement of a 10-for-1 stock split, effective from July 15, has been well-received, with the stock jumping approximately 10% after hours. Looking ahead, Broadcom has raised its sales outlook for fiscal year 2024 to around $51 billion, nudging past the consensus estimate of $50.42 billion. Despite a drop in net income from last year's $3.48 billion to $2.12 billion this quarter, the company's overall financial health appears robust, indicating confidence in its future growth trajectory.

Oracle Shares Hit Record High on AI-Fueled Cloud Growth

Oracle Corp. has exceeded expectations with significant bookings and struck partnership deals with its tech rivals, propelling the company's shares to an all-time high and advancing Chairman Larry Ellison's vision of establishing Oracle as a formidable force in the cloud computing arena. CEO Safra Catz highlighted the company's momentum, citing record-breaking sales contracts over the past two quarters, largely driven by the surging demand for training AI large language models on Oracle's cloud platform. Looking ahead, Catz forecasts a bright fiscal year with double-digit revenue growth through May 2025, anticipating an uptick in the pace as Oracle's cloud infrastructure scales up to meet the robust demand for AI capabilities.

Adobe Jumps After Results Signal It’s Part of AI Boom

Adobe Inc. saw its shares climb in after-hours trading as the company's outlook on sales outshined expectations, indicating that its suite of creative products, now enhanced with artificial intelligence tools, is gaining traction with customers. The company is forecasting $460 million in new annual recurring revenue from its digital media segment for the current quarter, surpassing analysts' predictions of $435.2 million. Despite the growing investor unease over the impact of generative AI on Adobe's stronghold in the graphic arts software sector—a concern shared by peers like Salesforce, Workday, and ServiceNow who have seen a slowdown in demand—Adobe's success in integrating AI into its offerings appears to be resonating with its user base, helping it to stay competitive against both established rivals and emerging AI-focused startups.

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