By Shah Gilani, Total Wealth Research, 2024-06-10
We've got another action-packed week in the markets ahead.
As always, traders are going to be watching Nvidia (NVDA) and Apple (AAPL), who both have major events happening.
But we've also got some big earnings announcements incoming from three other tech giants…
Oracle (ORCL), Broadcom (AVGO) and Adobe (ADBE) will all report earnings over the next few days. And I'm recommending you listen closely for two specific things in those announcements.
I've also got thoughts on Wednesday's Fed announcement… a potentially huge CPI release… and more in today's video.
Transcript
Hey, everybody. Shah Gilani here with your Monday Takeaways.
And the first takeaway is what happened last week.
So, what we've got happening today and this week is going to actually run off of what happened last week.
It ended up being a good week for stocks. Everybody thought, “Oh my goodness! We have more jobs, you know, were filled,” and, “Oh my gosh, the Fed's not going to cut,” but that didn't bother markets.
The S&P ended up by 1.25% on the week. The NASDAQ Composite was up by more than 2.4% on the week. So, stocks took everything in stride.
Yes, we're gonna have moments of doubt. We're gonna have moments of, “Are we overvalued?” Is Nvidia, which, by the way, is doing a 10-for-1 split today, Monday. So that's gonna be fun to watch. Whether or not it sees – and I think it will eventually, maybe not today, but certainly in the future and into the future – we're gonna see even more retail participation as the stock comes down from $1,200-plus a share to a $120-plus a share. A bunch of analysts also raised their estimates for the rest of the year for Nvidia.
So last week, everything went well.
You can't really fault, you know, a couple of companies missing earnings, you know, a little bit of juggling going on there. But the market seemed to do- well, bonds rallied last week, which is a good thing. Because the takeaway from bonds rallying last week is good news. Good news. Alright? Even though there's maybe less likely that the Fed Is going to cut, the takeaway from bonds rallying last week is that's good news because this week, we got a bunch of auctions.
Today, Monday, we got $70 billion of 13-week bills being auctioned, $70 billion worth of 26-week bills being auctioned, and $58 billion of three-year notes being auctioned.
So, busy Monday for treasury auctions. Tuesday, tomorrow, they've got $46 billion of 52-week bills being auctioned and $39 billion dollars of 10-year notes. So Monday and Tuesday, important days as far as US Treasury auctions.
Based on the rally last week in bonds, you would expect those auctions to go fairly well. We're gonna find out. The takeaway from those auctions will be, if they don't do well, how badly do they do? And what does that do to rates? That's really going to be important to watch, because these auctions are bellwethers. If they're not received well, we don't have good direct and indirect bidding on these auctions, especially the three-year and more especially the 10-year. That's a statement. And the stock market is gonna take notice of that. So, we got auctions to really contemplate.
But last week, had a good week and expect this to be a pretty good week too.
Though there is starting to be chatter that things are getting a little dicey and little bit more volatile.
Tiny bit more volatility in the stock market, but the bond market's been volatile. There's nothing new there. The bond market has been extraordinarily volatile, and I don't think that's going to change anytime soon. So what else we got going up besides Nvidia stocks, but, a bunch of stuff is going on starting today.
The Apple developers conference begins in Cupertino, and that goes through the 14th.
So what is Apple going to present to developers? Probably a lot of AI stuff. And that's important because Apple stock has just done very well after getting hammered and down like $165 in, I think it was like mid-April. It's now back up to $196 and change and looking to go chase a new high. That's a pretty nice turnaround, and it's all because they started to pump up the AI narrative that they were going to incorporate.
And they're starting this week with the developers' conference. We're gonna hear what they have to offer. If what they have to offer and what they talk about they're going to have isn't exciting enough, Apple stock could come down. I tend to doubt that because they're just that good.
Tim Cook opens up the developers conference this morning in Cupertino. I'm sure all eyes will be on his speech and how he opens the show. So, yeah, we got that going on, and throughout the week, people will be watching Apple.
Got some notable earnings coming up this week.
Got Oracle on Tuesday, got Broadcom on Wednesday, and got Adobe on Thursday. Those are three important stocks to watch. So, takeaway there is earnings still matter, and we still have some names that will be highly scrutinized.
So, again, Oracle Tuesday, Broadcom Wednesday, and Adobe on Thursday. Watch those. Watch how the market reacts. Watch for, also, and listen to if you can listen to the to the the conference calls with analysts, then read a transcript. But the takeaway from those will be how much do they talk about AI?
How much they talk about what they're doing… and how much they're going to talk about forward guidance. How much forward guidance are they gonna offer if it's really positive? If all three of them have really positive forward guidance, people, this market is gonna go higher.
Wednesday. Wednesday is a big day.
We got CPI in the morning, people. We know what the takeaways are there. It's markets are either gonna love it or hate it, and it could move markets, you know, based on options trading.
It looks like the reaction could be a 1.25, 1.5 percent move in the S&P. Up or down. But that's what options traders are betting. They're pricing in that kind of potential volatility on the CPI number. Not so much because Chairman Powell speaks on Wednesday but because the FOMC's meeting results Wednesday. They're not gonna change rates. It's a question of how what their guidance is like, how hawkish or dovish are they going to be in their statement.
That's gonna be important. But much more important than what's going to happen in the afternoon is gonna be what happens at 8:30 Wednesday morning when CPI numbers come out. So, just a a heads up on that. The estimate for CPI is 3.4% increase. So that's 3.4% year over year is the expected number as a consensus.
That's exactly in line with what happened in April, so that would be fine. Below that would be good. A lot below that would be really good.
A lot above that would be really bad. Core is estimated to come in at 3.5% year over year. That's 0.1% less than April's number. So, let's see if they come anywhere around that. Again, coming down below trend will be a real positive for the market, and then we can get a real great rally. We could see new highs.
Really bad, in other words, surprising to the upside… Heaven forbid we get something like 3.9% on core or 4%. Oh my goodness. That's going to be- we're gonna see a little bit of a sell off. We're gonna see something happen down there. That's maybe where the options traders are like, “Well, this could be a big move on Wednesday.” So Wednesday, CPI, FOMC meeting statement, and the SEP, the summary of economic projections, also comes out out of that FOMC meeting. And that SEP is really about where the committee sees rates down the road.
Last time in the in the March SEPs, that in in that, if you read through it – and, of course, being the wonky guy that I am, I do – there was an expectation that they would cut three times. Now we're gonna be reading through the SEP on Wednesday to find out, are they down to two? Are they down to one? What are they thinking now?
So, a lot happening on Wednesday. It's gonna be a busy week.
Markets are gonna act and react, and, takeaway from that is, watch yourselves out there. Things are looking good, and they should remain good.
But it's an interesting week with a lot of data points, lot of auction activity, CPI, and FOMC. Yikes. Be careful out there. Catch you guys next week.
The post Monday Takeaways: Incoming Big Tech Earnings Plus a Potentially Huge CPI Report appeared first on Total Wealth Research.
