Global macro
Before the start of trading on Friday, the three major equity index futures rose and fell.
The US PPI in June increased by 2.6% year-on-year.
The US PPI in June is 2.6% on a yearly basis, with an expected value of 2.30% and a previous value of 2.20%. The US core PPI in June rose by 3% year-on-year, with an expected value of 2.50% and a previous value of 2.30%. In June, the core PPI increased by 0.4% month-on-month, with an expected value of 0.20% and a previous value of 0.00%.
The key inflation indicators in the United States slowed down, and the market has priced in more than two rate cuts this year.
The latest overnight data showed that the US CPI in June was unexpectedly low, and both the MoM CPI and core CPI were below market expectations. Several economists said that the inflation data showed that US inflation is steadily approaching the target level of 2%. The significant slowdown in housing inflation is particularly encouraging and will enhance the Fed's confidence in continued inflation decline. Looking at the response of US Treasury bonds, the market has already largely digested expectations of rate cuts in September and December, while also raising the possibility of a rate cut in November to more than 50%.
The Fed's interest rate cut has entered the "finals", and the market is particularly concerned about this change!
The unexpected drop in US June CPI data may shorten the “last mile” of the Fed’s fight against inflation. Currently, people will pay special attention to any changes that may be made in the Fed's July policy statement and whether officials will decide to no longer refer to inflation as “high”. On Monday next week, Powell will give a public speech at the Washington Economic Club, which will be the Fed's last speech before entering the silent period. Fed directors Walr, Cogler, and Bauman are also planning to speak next week.
"The Big Short" prototype highly recommends technology stocks and stated that there is no reason to short the US stock market.
Steve Eisman of Neuberger Berman Group expects the strong performance of large technology stocks in the United States to continue for “many years” because artificial intelligence will be more easily and widely accepted by consumers through electronic devices. He said that people will want to use new AI applications on smartphones and personal computers, which will drive the “largest upgrade cycle in history” as they buy upgraded devices. He said that the US economy is slowing down, but the overall outlook is good, and there is no fundamental reason to short stocks significantly.
How long will the US stock AI hot trend continue? Goldman Sachs: Focus on whether huge investments can bring returns.
Goldman Sachs strategist Ryan Hammond's team recently released a report stating that.$Amazon (AMZN.US)$,$Meta Platforms (META.US)$,$Microsoft (MSFT.US)$and$Alphabet-A (GOOGL.US)$A total of 357 billion US dollars has been invested in capital expenditures and R&D in the past year. "A significant portion" of these expenses were allocated to AI, accounting for nearly one-fourth of the total capital expenditures and R&D expenditures of the S&P 500 index. The bank expects that if AI expenditures fail to generate returns, the future stock prices of these largest market leaders (AI companies) are expected to fall.
Hot news
Pre-market trading caused mixed gains and losses of growth tech stocks, and Tesla continued to decline by nearly 2%.
Tesla launches new Model 3 long-range rear-wheel drive model, which can enjoy a $7,500 tax credit.
According to the official website, the electric car giant has launched a rear-wheel drive Model 3 with a long battery life, which is $5,000 cheaper than the all-wheel drive model. The starting price for the new long-range rear-wheel drive model is $42,490, with a $7,500 federal electric vehicle tax credit, bringing the actual price down to $34,990, or less than the cheapest Model 3 model.$Tesla (TSLA.US)$It has launched a long-range rear-wheel drive model of Model 3, which is $5,000 cheaper than the all-wheel drive model. The starting price of the new long-range rear-wheel drive model is $42,490, plus a $7,500 federal electric vehicle tax credit, bringing the actual selling price down to $34,990, or lower than the cheapest Model 3. The prices of basic Model 3, long-range all-wheel drive, and high-performance versions remain unchanged.
JPMorgan Q2 revenue exceeds expectations, net interest income is slightly higher than expected.
$JPMorgan (JPM.US)$The Q2 revenue in 2024 was $50.2 billion, the market expected $42 billion, and the same period last year was $41.307 billion. The investment banking business revenue in the second quarter was $2.46 billion, and the market expected $2.13 billion. The total amount of loans in the second quarter was $1.32 trillion, and the market expected $1.32 trillion. The net interest income was $22.86 billion, and the market expected $22.82 billion. JPMorgan expects net interest income of about $91 billion in the fiscal year 2024.
Bank of America: Raised Apple's target price to $256, and will see a strong iPhone upgrade cycle in the coming years.
Bank of America pointed out that the increased demand of iPhone users for the upgrade cycle of old smart phones and the confidence in GenAI functions will drive the willingness of smart phone users to upgrade iPhone models. The report mentioned that Apple's customer loyalty is still high, and 58% of existing iPhone users plan to buy another iPhone for an upgrade. Based on expectations of GenAI driving multiple replacement cycles for iPhone, strong service growth, and profit margin expansion, the bank raised Apple's target price from $230 to $256 and reiterated a buy rating.$Apple (AAPL.US)$The report mentions the willingness of smart phone users to upgrade their iPhone models. Apple's customer loyalty remains high, with 58% of existing iPhone users planning to buy another iPhone for upgrade. Based on expectations of multiple replacement cycles driven by GenAI, strong service growth, and profit margin expansion, the bank has raised Apple's target price from $230 to $256 and reiterated its "buy" rating.
Intel is scheduled to launch the Core Ultra 200 desktop processor in October.
According to Taiwan media BenchLife.info cited sources, Intel will still launch the Core Ultra 200 desktop processor, codenamed "Arrow Lake-S", and the accompanying Z890 chipset in mid-to-late October this year. The specific listing time will not be earlier than October 6th. The first release of the Intel Core Ultra 200 desktop processor will include 5-K-suffix non-locking frequency SKU styles. It is reported that Intel has now begun to provide PreQS-phase processor samples for testing to specific motherboard manufacturers.
Taiwan Semiconductor drives market capitalization to over $420 billion! The Q2 earnings storm will lead to a new leap in market capitalization.
$Taiwan Semiconductor (TSM.US)$It has achieved remarkable market value growth this year, reaching as high as $420 billion. The market generally expects the company's quarterly earnings report to be very strong, which may further consolidate and expand its market value leap. According to surveys of analysts by Bloomberg, it is expected that TSMC will announce a 29% year-on-year increase in net income in the second quarter next week. Analysts, including JPMorgan and Morgan Stanley, predict that TSMC may also raise its full-year sales forecast, providing strong support for a new round of expansion of the company's valuation.
Not to be outdone, after NVIDIA CEO Huang Renxun announced the latest AI chip iteration schedule on the evening of June 2nd, AMD CEO Su Zifeng also threw out an iteration roadmap during her speech on the morning of June 3rd before the COMPUTEX opened. The company will launch the MI325 X and Ryzen AI300 this year, the MI350 series in 2025, and the MI400 series in 2026.
Most popular China concept stocks rose before the market opens.
Beike pre-market rise over 2%, bullish on major banks
$KE Holdings (BEKE.US)$Pre-market rose 2.55% to $15.71. Citigroup said that there may be a short-term trading window for Chinese real estate stocks before the third plenary session in mid-July, as China's real estate sales improved in June and the drop in July is expected to continue to narrow year-on-year. Citigroup pointed out that the third plenary session is expected to focus on rural land reform (hukou system), property tax, and income distribution of central/local governments (including land transfer income) in the real estate sector. It is expected that most policies can improve the health of the real estate industry and accelerate its soft landing. The bank favors stocks with good cash flow and profitability, including China Res Land and Beike.
Ctrip pre-market rise 2.66%, inbound travel is hot, Q2 pick-up and drop-off environment increased by 145%
$Trip.com (TCOM.US)$Pre-market rose 2.66% to $50.6. As China's visa-free "circle of friends" continues to expand, more and more inbound tourists travel to China, and the inbound tourist market continues to heat up. Ctrip data shows that in the second quarter of 2024, the inbound Chinese tourism order increased by 28% compared to the first quarter, and the demand for ground transportation services for foreign tourists landing in China increased rapidly. The second-quarter pick-up and drop-off orders for inbound tourists increased by 145% compared to the first quarter. CITIC Research Report pointed out that OTA platforms benefit from the improvement of inbound tourism infrastructure, and focus on Ctrip and Tongcheng Travel.
Bilibili rose more than 3% pre-market trading and was upgraded to "buy" by UBS, which raised its EPS estimate per share.
Reminder for US Macro Events
(All in Peking Time)
20:30 US June PPI YoY
22:00 US July one-year inflation rate expected initial value
22:00 US July University of Michigan Consumer Confidence Index initial value
01:00 US total number of oil rigs for the week ending July 12
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