DHUnplugged #702: Inflation Nation

DHUnplugged Podcast

Emerging markets breaking out of long consolidation

PPI HOT – Market does not care

A Meme stock face ripper!

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Warm Up
- Inflation reports PPI today and CPI tomorrow
- Sentiment is dropping - wondering why
- Meme stock face ripper
- EV days - losses not acceptable
- PPI and CPI this week

Market Update
- Another good week - seems like coming out of downturn
- Rates down- 10Y Treas falling over past week
- S&P 500 near record
- Emerging markets breaking out of long consolidation
- PPI HOT - Market does not care

Fed talk
- Fed's Goolsbee and Kashkari
- There has been cross currents in the data.
- There has been some bumps in the road on inflation in 2024.
- The Fed is in a wait and see mode
- Cautious about how restrictive policy is.
- More data is needed before they can predict a rate cut.
- There is a high bar for another rate hike, but not ruling it out.
- Leases trending up is a concerning signal.
----- What does any of that tell us?
------ We need to start a movement to SHUT THE FED UP (STFU)

Latest Inflation Readings
- The Producer Price index for final demand increased 0.5% month-over-month in April (Briefing.com consensus 0.3%) following a downwardly revised 0.1% decline (from 0.2%) in March. The index for final demand, excluding food and energy, also increased 0.5% month-over-month (Briefing.com consensus 0.2%) following a downwardly revised 0.1% decline (from 0.2%) in March.
- On a year-over-year basis, the index for final demand was up 2.2%, marking the largest increase since April 2023, while the index for final demand, excluding food and energy, was up 2.4%, unchanged from March.
- The key takeaway from the report is that nearly three quarters of the increase in final demand prices was due to a 0.6% increase in the index for final demand services, something that will detract from the Fed's confidence that inflation is on a sustainable path to its 2% target.

Powell speaking AGAIN!!!!!!!!!!!!!
- Fed Chairman Jerome Powell says he doesn't think next rate move will be a hike, more likely a hold; time will tell if policy is sufficiently restrictive; PPI reading was quite mixed

Getting AI Overload
- OpenAI CEO Sam Altman says "not gpt-5, not a search engine, but we’ve been hard at work on some new stuff we think people will love! feels like magic to me"

Sentiment
- Consumer sentiment fell sharply in May to the lowest level in six months as Americans cited concerns about stubbornly high inflation and interest rates and fears that unemployment could rise
- May Univ. of Michigan Consumer Sentiment - Prelim 67.4 vs 76.5 Briefing.com consensus; April Final was 77.2

Fed Put
- Markets melting up since last Powell comments
- There is a new spin on the old "Fed put." The latter rested on an unspoken assurance that the Fed would step in with easier policy to forestall a market meltdown.
- The new version doesn't guarantee a rate cut soon, but it has created an unspoken assurance that market participants can trade around the idea that the next monetary policy move is likely to be a rate cut.

Meme Stocks
- Gamestock was up 80% and many of the other names moving hard
--- Seems like the original Gamestock dude - Roaring Kitty put out a tweet on Monday and the stock went bananas...

More Squeeze
- Shares of the vaccine maker soared 99% Friday, after the company signed a $1.2 billion licensing agreement with Sanofi that includes commercializing a combined Covid-19 and flu shot.
- The move boosts a stock that had plunged about 99% — prior to the deal — from its 2021 peak amid waning demand for its Covid vaccine.

AMC - NICE FELLAS!
- AMC has a fundraising deal known as an at-the-market offering that lets it create new shares opportunistically to sell to buyers in the open market. The deal is part of AMC’s long-term effort to secure the capital needed to execute its turnaround, even if that means diluting investors seeking to cash in on short-term rallies.

NeuralLink
- Elon Musk's startup Neuralink on Wednesday said part of its brain implant malfunctioned after it put the system in a human patient for the first time.
- In January, Neuralink implanted the device in a 29-year-old patient named Noland Arbaugh as part of a study to test its safety.
- Seems that several of the "threads" that connect devise to the brain have retracted from patients brain
- Neuralink did not disclose how many threads retracted from the tissue.

More Musk
- U.S. prosecutors are examining whether Tesla committed securities or wire fraud by misleading investors and consumers about its electric vehicles’ self-driving capabilities, three people familiar with the matter told Reuters.
- Tesla’s Autopilot and Full Self-Driving systems assist with steering, braking and lane changes - but are not fully autonomous. While Tesla has warned drivers to stay ready to take over driving, the Justice Department is examining other statements by Tesla and Chief Executive Elon Musk suggesting its cars can drive themselves.
- Eventually something will stick

Vapes
- Five million disposable vapes are thrown away each week, equal to the lithium batteries of 5,000 electric vehicles over the course of the year, the government said.
- The U.K. government on Monday announced it will ban disposable vapes, citing an "alarming rise" in the number of young people using them.

Bad Boys
- High-end brothels in the Boston and eastern Virginia regions provided sex for pay to "elected officials, high tech and pharmaceutical executives, doctors, military officers, government contractors that possess security clearances, professors
- Three people were arrested in connection with operating the pricey sex shops, which required "interested sex buyers" to provide employer information and references before booking sessions with prostitutes, authorities said.
- The brothels charged customers about $350 to "upwards of $600 per hour depending on the services and were paid in cash," according to the U.S. Attorney's Office for Massachusetts, which is prosecuting the defendants.

Follow Up - UNH Hack
- UnitedHealth Group said on Monday that hackers stole health and personal data of potentially a "substantial proportion" of Americans from its systems in February, as the largest U.S. health insurer scrambles to contain the damage.
- The disclosure suggests patients' healthcare information remains vulnerable. An initial review of the compromised data showed files with protected health information or personally identifiable information "which could cover a substantial proportion of people in America," the company said in a statement on its website.

Drink Less?
- Consumers are choosing an alcohol-free lifestyle either part-time or all of the time, and 41% of consumers surveyed say they intend on drinking even less in 2024, according to a report published by NC Solutions.
- Regarding the survey, 1,000 Americans 21 years of age and older were questioned on their current drinking habits and future plans for alcohol consumption.
- Gen Z was recognized as the generation that started the recent "sober conscious" movement, and 42% of those surveyed believe they have gestured toward the change and turned it into a trend.
- Yes BUT!!!!!!!!!! They are smoking weed in place of....

McDonalds
- McDonald’s is working to introduce a value meal in U.S. stores to help offset an increasingly challenging environment for consumers.
- The $5 meal could include four items: a McChicken or McDouble, four-piece chicken nuggets, fries and a drink.
- The potential new offering comes at a time when low-income consumers are beginning to pull back on spending, particularly at fast-food brands.
- “Consumers continue to be even more discriminating with every dollar that they spend as they faced elevated prices in their day-to-day spending, which is putting pressure on the [quick-service restaurant] industry,” CEO Chris Kempczinski said on the company’s earnings call on April 30.
- - Many Franchise owners balking

Trump Media - Insider Trading
- So much bad stuff surrounds this stock
- A financial executive was convicted Thursday of enabling his boss and others to make over $22 million illegally by trading off his tips ahead of the public announcement that an acquisition firm was taking former President Donald Trump’s media company public.
- Garelicks' co-defendants pleaded guilty before trial, admitting that they made over $22 million illegally

Apple Worm
- A newly released ad promoting Apple's new iPad Pro has struck quite a nerve online.
- The ad, which was released by the tech giant Tuesday, shows a hydraulic press crushing just about every creative instrument artists and consumers have used over the years — from a piano and record player, to piles of paint, books, cameras and relics of arcade games. Resulting from the destruction? A pristine new iPad Pro.
- Message - Crushing human creativity
- The ad had been pulled back and Apple has issues and apology

OpenAI - New Model
- OpenAI on Monday launched a new AI model and desktop version of ChatGPT, along with a new user interface.
- The update brings GPT-4 to everyone, including OpenAI’s free users, CTO Mira Murati said in a livestreamed event.
- She added that the new model, GPT-4o, is “much faster,” with improved capabilities in text, video and audio.

More Open AI - Rumors
- OpenAI plans to announce its artificial intelligence-powered search product on Monday, according to two sources familiar with the matter, raising the stakes in its competition with search king Google.
Seems that this was fleeting - Google got hit for 2% on the headline, but when Altman clarified, Google shares recovered.

Ford EV
- Ford Cuts Battery Orders as EV Losses Top $100,000 Per Car
- Ford Motor Co. has begun cutting orders from battery suppliers to stem growing electric-vehicle losses, according to people familiar with the matter, as it throttles back ambitions in a rapidly decelerating market for plug-in models.

Softbank
- SoftBank posted a 7.24 billion Japanese yen ($4.6 billion) gain on its Vision Fund in the fiscal year ended March, the first time the flagship tech investment arm has been in the black since 2021.
- SoftBank's flagship tech investment arm, the Vision Fund, had a tough time in the fiscal year that ended in March 2023, posting a record loss of around $32 billion amid a slump in tech stock prices and the souring of some of the business' bets in China.

Excitement Around WWDC
- At its WWDC keynote on June 10, Apple is expected to reveal a series of AI tools, including an improved version of ?Siri? that uses generative AI to be more conversational and capable, with the ability to "chat" with users instead of just responding to individual queries.
- Apple plans to market this revamped version of ?Siri? as a more security-focused alternative to rival AI services|- Apple is also working to improve how Siri handles tasks such as setting timers, creating calendar appointments, adding items to Reminders, and summarizing text.

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