First Tech Fund Outflows In 2 Months

This week is one of the most important of the summer: 

- CPI Inflation: Tuesday

- PPI Inflation: Wednesday

- FED Meeting: Wednesday 

- Retail Sales Data: Thursday 

- Initial Jobless Claims: Thursday

Buckle up!

Market

Prices as of 4 pm EST, 6/9/23

Macro

Former President Donald Trump is set to appear in a federal courthouse in Miami tomorrow.

• He is facing 37 federal charges linked to his handling of classified documents.

• It will be the first time in US history a former president is prosecuted.

• The proceedings are expected to be lengthy and could possibly extend into (or even through) the presidential election.

• Trump has thus far denied any wrongdoing and leveraged the indictment to rally his base and fuel campaign contributions.

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In China, years of overreliance on borrowing could lead to an extended period of weak economic growth.

• Total debt as a percentage of GDP in the country was 295% in September.

• As households, the private sector, and local governments work to pay down that debt, private business investments, personal savings, and consumer spending are set to suffer.

• At the same time, China’s real estate industry is expected to experience a slow and prolonged recovery which will further act as a drag to economic growth.

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Fed officials begin their June meeting tomorrow.

• Members face a challenging situation where they’ll be juggling high inflation, strains in the banking sector, a tight labor market, and a resilient economy.

• Over the last 14 months, the Fed has hiked rates 10 consecutive times totaling 5%.

• According to interest rate traders, the Fed is expected to break that streak with a pause this week.

• But that doesn’t mean tightening is over: traders currently expect officials to lift rates by another 25bps during their July meeting.

CME Group

Stocks

Tesla TSLA is set to rake in an additional $3 billion by 2030 thanks to deals with General Motors GM and Ford F allowing their EVs to use its charging network

• The deals have helped fuel Tesla shares to their longest-ever streak of consecutive daily gains (11).

• Over that period, the company has added nearly $200 billion to its valuation after surging 35%.

• In fact, Tesla stock was the retail favorite last week with individual investors snapping up more than $1.3 billion in net buys.

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Companies and large investors have been selling into the recent rally in stocks.

• Since April, more than $24 billion worth of stock has been sold in follow-on sales, including $17 billion in May alone.

• In 2022, the monthly average for follow-on sales was just $6.9 billion.

• The sales have also been made at smaller discounts (8.3% in May) than usual (12% in 2022).

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Tech funds saw their first outflows in 2 months in the week ending June 7.

• Investors sold more than $1.2 billion over the period.

• Meanwhile, flows into the exchange-traded fund (ETF) market suggest a cautious approach from investors who are buying ETFs at the slowest pace since 2019.

• On the other hand, the options market points to optimism as demand for call options last week reached its highest in 14 months.

Bloomberg

Energy

Goldman Sachs has cut its forecast for 2023 oil prices to $86 from $95 a barrel.

• The bank had previously been among the most bullish in its outlook for oil, having predicted prices would reach $100 by the end of the year as recently as March.

• It was the third downward revision in 6 months for Goldman, which points to increasing global supplies and weakening demand as reasons for the downgrade.

Goldman Sachs

Earnings

With Q1 earnings nearly in the books, here’s a preview of what’s to come:

• Earnings are expected to drop by 6.4% in Q2 which would be the largest decline since Q2 2020 (-31.6%).

• Revenue, meanwhile, is expected to fall by 0.4% which would mark the first decline since Q3 2020 (-1.1%).

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What we’re watching today:

• Oracle ORCL

Top Headlines

• Treasury shorts: Hedge funds are aggressively shorting short-dated Treasuries ahead of this week’s Fed meeting.

• China-Cuba spying: The Biden administration confirmed China has been operating a spy base in Cuba since at least 2019.

• Freeloader crackdown: Netflix NFLX saw nearly 100k daily sign-ups after officially implementing its crackdown on password sharing.

• Overhaul: US Democrats are pushing a bill to overhaul the debt-ceiling process.

• Blackout: Thousands of Reddit communities will go dark for at least 48 hours in protest of the company’s plan to charge third-party app developers for accessing its data.

• Soros empire: 92-year-old George Soros is handing the keys of his empire over to his 37-year-old “more political” son, Alex Soros.

• AI optimism: OpenAI founder Sam Altman expressed optimism about the possibility of global coordination after a tour of capital cities.

• Chipmaker ops: The White House plans to allow semiconductor manufacturers in South Korea and Taiwan to continue operating and expanding chip-making operations in China.

Week Ahead

• Monday: Consumer inflation expectations, federal budget

• Tuesday: CPI, Core CPI, NFIB Business Optimism Index

• Wednesday: PPI, Core PPI, Fed decision, Powell press conference

• Thursday: Retail sales, initial jobless claims, import/export prices, Empire State Manufacturing Index, Philadelphia Fed Manufacturing Index, industrial and manufacturing production, business inventories

• Friday: Michigan consumer sentiment

Crypto

Prices as of 4 pm EST, 6/9/23

• BTC dominance: Bitcoin’s BTC/USD dominance rate reached nearly 50% over the weekend as investors seek safety away from altcoins.

• Tax evasion: Democrats are urging the Treasury and IRS to take action against wash trading in the crypto industry.

• Cut off: Payment and banking partners are pausing their relationships with Binance.US, effectively cutting it out of the US banking system.

• Bearish BNB: Open interest in Binance’s BNB token futures has reached a 5-month high, pointing to increasingly bearish short positions.

• USDT mint: For the second time in as many months, Tether has minted 1 billion USDT on the Ethereum blockchain.

Deals

• EU approval: Broadcom is expected to receive conditional EU antitrust approval for its $61 billion acquisition of VMWare.

• Credit card processing: Brookfield Asset Management is set to acquire Network International Holdings for $2.8 billion.

• Swiss giant: A giant, $1.6 trillion Swiss bank has been created now that UBS has completed its emergency takeover of Credit Suisse.

• EV metals: Volkswagen- and Glencore-backed SPAC firm ACG Acquisition is acquiring 2 Brazilian mines for $1 billion to secure nickel and copper for EVs.

• Financial software: Nasdaq is set to make its largest acquisition ever with the purchase of financial software company Adenza in a $10.5 billion cash and stock deal.

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