The Morning Market Feed, June 13th

Jun 13

We saw markets absolutely take off on the CPI report which came in cooler than expected. The 10Y-Yield dropped over 3% to 4.25% and the Russell2000 jumped 3.25% before the rate decision. Following the FED speak/dot plot this somewhat clawed back and the day ended with the 10Year at 4.32%, and the Russell2000 up 1.53%. I will also have to come back on a story from earlier this week, which turns out to be different than first thought and reported.

CPI came in flat on a month-over-month basis, and up 3.3% on a year-over-year basis. This compares to expectations of 0.1% (MoM) and 3.4% (YoY).
The core CPI number came in at 0.2% on a Month-over-Month basis, and 3.4% on a Year-over-Year basis. The expectations were for 0.3%, and 3.5%.
The cooler-than-expected CPI numbers sparked wide enthusiasm and hope for rate cuts, as this is what the markets are anticipating and keep on wanting.

Powell’s speech and the dot plot

The dot plot wasn’t all too favorable, as most FED members saw 1, to 2 rate cuts in 2024. What needs to be said is that these projections were made before the latest CPI report, and although the FED members can readjust their projections on this new information, it’s rarely done, this was said by Jerome Powell during his press conference. It couldn’t de-rail markets, however. As for the speech, this is a place where very little new information is shared most of the time, journalists try to look for hints in the response and Powell tries to answer as neutral as he can. What traders look for are hints of tonality. As for most of the meeting, the tonality felt quite neutral, with some dovish comments in between them, like the fact that no FED members are looking at rate hikes. These are comments that markets feel really good about. All in all, the reaction of the market says it all, a more dovish Powell was hoped for, although it wasn’t a disaster.

PayPal falling

PayPal is taking a step back after last week’s enormous inflow of bullish sentiment. This comes as there have been a few other developments that underscore the difficult competitive nature of the payments market. The Apple tap-to-pay update would be a challenge to Venmo, and Apple's partnership with Affirm will see the BNPL competitor integrated into the payment products. You can read the report by BofA here.

Celsius Holdings

Earlier this week I came out with a story that I checked and found through Twitter to justify a negative 9.6% move. As surprising as it may be, this story was wrong. When I checked, I couldn’t find anything on the investors’ website from Celsius, nor on any of the websites I check for news, but apparently, there was. Now, don’t blame me too hard because they have a WordPress website and the webcast was hidden in this mess below. I find it somewhat charming as it shows the focus of the company, but they have a market cap of $15 billion, a bit more effort can be made for the investor website.
But what was said? Pepsi, the supply partner of Celsius will be reducing inventories by 20, to 30 million dollars. This comes as Pepsi initially bought a large supply to make sure they have enough inventories, and is now adjusting their inventory for the wanted amount of days at hand.
The article covering it can be found here, and the conference can be listened to here.
One of the things the conference started with is the slowdown of the energy drinks sector, not really something investors want to hear in a growth story like Celsius, this also makes more sense than a story about some twist on vitamin B12.

Apple The Great, for a minute

Apple had reclaimed its throne as the king of the markets. After pushing almost 15% in 2 days, about 400, to 500 billion dollars in market cap, it overtook Microsoft as the most valuable company in the world. Unfortunately, in the final 45 minutes, the stock fell about 3.5% from $220, to $212, which means the throne was given back. I must admit, I feel like the throne belongs to Apple, even as it comes after the anticipation of a growth story I don’t believe all too much in, I just think Apple sounds better as the most valuable company.

What am I looking at today?

There will be a PPI report, as well as the weekly jobless claims. These two data points will have to confirm the CPI story from yesterday in order for markets to make sustained upward moves. PPI Month-Over-Month is expected to come in at 0.1%, with the Year-Over-Year number expected at 2.5%. Core PPI is expected at 0.3% Month-Over-Month, and 2.4% Year-Over-Year.

The initial jobless claims, which have to come in hot for the rate cut story to continue, are expected at 225K. Coming in hot would mean a number higher than 225K, continuing jobless claims are expected at 1800K.

Then there is one more thing I will be looking for after the markets close, which is Adobe’s earnings. The stock is under a microscope as investors are afraid the moat is deteriorating for the company due to increased competition as a result of generative AI. I am not expecting generative AI to crush the moat all too much, but it may have a slight impact. What I will be looking at is the margins, comments on investments, and also how the Digital Experience side is doing as this might be somewhat lagging. This is based on the Salesforce earnings report.
Revenue is expected to come in at $5.291 billion, with EPS of $4.39

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