The Morning Market Feed, June 12th

Stocks rallied into the close, as many stocks closed green that were still very red well into the morning trading session. Two stocks that stood out in my portfolio were PayPal, and Shopify. Other stocks that made notable moves were Tesla and Apple. I also owe you an apology, so let’s dive straight into it!

• Let’s start with PayPal

I saw the drop attributed to yesterday’s Apple event, but that was the day before yesterday. Yesterday Jamie Miller, the CFO, joined the RBC Financial Technology Conference. The conference started with notes on how the company has done with re-organizing. What stood out to me directly afterward was however enthusiastic Alex Chriss was about the future, the visionary he was, Jamie Miller was way more down to earth and dialed it back a bit, this was the reason the stock fell. The conference also felt way more informal and not as directed.
Miller was diving way more into the advantages the stock has seen, and the challenges in the comps later into the year. Miller also dove into the PayPal Fastlane checkout, how it works, and what the advantages are for PayPal, as well as for the customer. It was once again confirmed that the company was giving away some products to enterprise customers, and that they will not do so anymore. You can listen to the conference yourself here.

• Shopify

Shopify is moving really interesting, because I have owned the stock for about 2 weeks now, waiting to add a bit to it. I am up about 10% on the name already, because the stock has been up for 11 days straight. Reporting on it is of course asking for the streak to break, but what do I think is happening there? Very simple actually, FOMO. The stock has sold down after the most recent earnings, something that doesn’t happen very often, but now that it is down everybody who wanted to buy it, bought it, also, now that the stock has moved up all these days in a row, everybody who kinda wanted to own the stock sees it running away.

• Tesla news cycle continues

Tesla has seen so much negative news, that I simply don’t want to bring bad news on the company every single day. I’m not a Tesla shareholder, nor am I an Elon fanboy, but we have to admit that the media has a passion for being negative about Tesla, however justified it sometimes may be. Yesterday, JPMorgan analyst Ryan Brinkman, came out with a note to clients in which he noted that the Tesla Robo-Taxi launch is likely years away.
This comes on top of all of the negative reporting on Elon’s pay package voting. This is of course the hottest topic in the market and all large holders are asked for what they do. I believe, however excessive the amount, it was approved based on what was seen as unreachable goals. They were met and now Elon is entitled to the compensation. I can understand however, that people feel different about it at this point. The stock has been slumping, Elon has gone off on a political warpath, and reversing the compensation takes back shares, basically doing the same as a very large buy-back.

• So Why did Apple gain over 200 Billion in market cap?

Apple Intelligence of course, but indirectly. What happened is that due to the OpenAI partnership, Apple got a bunch of new price targets and profit targets. Analysts were all over the stock like a bunch of hungry hyenas, and what else could have been expected? It seems as if analysts aren’t the fastest learners. Apple will see an increase in replacements according to Morgan Stanley, but this sounds ridiculous to me. This sounds like the same as when Bing would for sure replace Google in search due to integrating OpenAI. You can guess what happened, nothing. I have seen no indications that the average consumer gives a single … about AI, if anything, I have seen more signs about the average consumer being held back on it because it is quite intimidating.
The rumor is also about iPhones getting bigger, now this is something I do see the consumer actually care about, I’d like a larger phone as well, it has its advantages, but any increase in sales will be simply attributed to AI.

• My apology

It’s Wednesday and normally this would mean a stock analysis. I have been so busy this week, that I just couldn’t get it done. It would not only be half done, it wouldn’t be thoughtful either. This means that I will make up for it next week with an analysis in which I will dig deeper into the company I’m looking into.

• What will be important today?

It will be a very big day in the market. We will not only have a CPI report, but also a rate decision and the press conference after. On top of this, we will also get a summary of economic projections, better said, a dot plot. The dot plot will provides us with the actual expectations from the FED members on how many rate cuts they expect. This will affect the hope for rate cuts as I have explained many times before.

CPI is expected to come in at 0.1% on a month-over-month basis, and 3.4% year-over-year.
Core CPI is expected at 0.3% month-over-month, and 3.4% year-over-year
Rates are expected to remain unchanged and during the FED speech of Powell afterward, Powell is expected to take a reasonably hawkish stand as economic data hasn’t supported rate cuts just yet.

That was it for today. Let’s see how markets react to the CPI reports, FED speech, and the dot plot.

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