June 16th Market Overview

Happy Monday.

Alright, what a decent start to the week after things got pretty wobbly last week. What a difference 48 hours makes. Manufacturing data was ugly, but when geopolitical tensions ease this fast, bad economic news takes a back seat.

Let's dig in...

Executive Summary

1. Iran seeks diplomatic exit - signals willingness to negotiate through Arab intermediaries, sending oil lower and markets higher
   

2. Fed decision Wednesday - zero cut expectations despite Trump’s pressure as oil volatility complicates inflation picture
   

3. Economic divergence widens - Empire State Manufacturing crashed while China retail sales beat, showing mixed global signals
   

4. U.S. Steel deal approved - Nippon Steel pays $55 per share but government retains “golden share” operational control
   

Market Overview

Key Market Drivers

1. Diplomatic Breakthrough: Iran sent urgent messages through Arab nations signaling it wants to end hostilities and negotiate nuclear program status. Condition: U.S. must not join attacks. Persian Gulf states pushed Washington to pressure Israel for immediate ceasefire in exchange for Iran’s nuclear flexibility. Oil tumbled from $77 weekend highs to around $71.
   

2. Fed Policy Paralysis: Powell faces impossible Wednesday decision with zero market expectation for cuts. Trump keeps demanding easing, but weekend oil spike above $77 makes inflation hawks nervous.
   
   Manufacturing weakness would normally support rate cuts, but Middle East volatility kills that trade.
   

3. Economic Reality Check: Empire State Manufacturing Survey fell to -16 versus -6 expected as new orders and shipments declined. The weakness would normally support rate cuts, but Middle East oil volatility kills that trade. China provided the bright spot with retail sales jumping 6.4% - the best since 2023 - giving Beijing leverage in ongoing trade negotiations.
   

Stock Spotlight

U.S. Steel $X ( ▼ 0.02% ) gained after Trump approved the Nippon Steel merger with a national security twist. The Japanese company pays $55 per share, but the U.S. government gets a “golden share” giving the president “total control” over major decisions.

Meta Platforms $META ( ▼ 2.56% ) moved higher as WhatsApp finally gets advertising. The messaging platform will also monetize its Channels feature through search ads and subscriptions.

Advanced Micro Devices $AMD ( ▼ 4.08% ) climbed after Piper Sandler raised targets following Friday’s quarterly call. Analysts expect AI business acceleration post-Q3 when China-related charges pass and hyperscaler client conviction increases.

Roku $ROKU ( ▼ 1.92% ) jumped on exclusive Amazon partnership reaching 80 million households, creating connected TV’s largest authenticated advertising footprint.

Palantir Technologies $PLTR ( ▼ 4.14% ) advanced as defense tech caught a bid from ongoing Middle East tensions despite broader de-escalation hopes.

Big Name Updates

Taiwan Semiconductor $TSM ( ▼ 0.8% ) completed its first Arizona production run for Apple $AAPL, AMD, and Nvidia $NVDA.

Over 20,000 wafers included Blackwell chips and A16 processors - a major milestone for U.S. chip manufacturing reshoring.

Amazon $AMZN ( ▲ 0.49% ) announced $20 billion in Australia data center investments through 2029, the country’s largest tech commitment ever as cloud wars go global.

Alphabet $GOOGL ( ▼ 0.22% ) faces DOJ scrutiny over its $32 billion Wiz acquisition. Regulators worry the cloud security deal eliminates competition before it starts.

Eli Lilly $LLY ( ▼ 0.47% ) expanded Zepbound access through its direct-to-consumer platform, cutting out middlemen for weight-loss patients seeking the popular medication.

Other Notable Company News

Nike $NKE ( ▲ 3.34% ) held Goldman’s Buy rating with $72 target as consumer engagement with recent innovation improves alongside refreshed marketing efforts.

MGM Resorts $MGM ( ▲ 7.27% ) jumped after BetMGM raised revenue guidance to at least $2.6 billion from the previous $2.4-2.5 billion range.

Cisco Systems $CSCO ( ▼ 0.4% ) advanced after Deutsche Bank upgraded to Buy, citing better growth visibility and attractive valuation for the networking giant.

Celsius Holdings $CELH ( ▼ 0.84% ) got upgraded to Buy at TD Cowen as scanner trends turned flat versus previous declines. Summer seasonality could drive further improvement.

Wix.com $WIX ( ▲ 1.62% ) gained on Wells Fargo’s upgrade to Overweight, with analysts citing strong catalysts ahead for the website builder.

Sector Watch

Bond Market

The 10-year yield traded around 4.45% despite solid demand at Monday’s $13 billion 20-year auction. Treasury markets got relief from geopolitical de-escalation but inflation concerns linger.

• Oil’s retreat from weekend highs reduces energy-driven price pressures
• Fed policy uncertainty continues weighing on longer-dated bonds
• Persistent inflation expectations keep pressure on long-term yields

Policy Watch

Fed Meeting Wednesday:

Powell faces zero market expectation for cuts despite Trump’s continued pressure. Rising oil from Middle East conflict makes easing impossible, even with manufacturing weakness showing economic cracks.

Tariff Timeline: The 90-day pause expires July 9. Treasury Secretary Bessent hints at extensions for countries “negotiating in good faith,” but Commerce Secretary Lutnick says the 10% baseline stays “for the foreseeable future.”

• G-7 Summit in Canada gives nations face time with Trump to negotiate tariff relief
• European Commission reportedly ready to accept flat 10% U.S. tariff under specific conditions
• Bank of Japan considering halving bond-buying taper pace, an implicit QT move starting April 2026

What to Watch

1. Fed Rate Decision Wednesday: Powell can’t satisfy Trump’s cut demands with oil volatility complicating inflation outlook. Any hawkish signals could pressure risk assets further.
   

2. Israel-Iran Diplomatic Progress: Arab intermediaries facilitating talks as Iran’s Supreme Leader Khamenei grows isolated after losing key generals. Nuclear facility damage remains limited, keeping negotiation window open.
   

3. Energy Infrastructure Risks: Israel claims “aerial superiority” after destroying one-third of Iranian missile launchers. Iran threatens Strait of Hormuz closure - one-third of global oil flows through this critical passage.
   

4. Manufacturing Weakness Spreads: Empire State’s -16 reading signals broader economic softening. Additional regional Fed surveys could influence Wednesday’s policy stance if weakness accelerates.
   

5. China Trade Resistance: Capital Economics warns China will push back on U.S. demands while other nations accommodate, creating “deepening superpower rivalry” and potential renewed trade volatility despite recent Geneva progress.
   
   
   Thanks for reading 🙂
   
   - John
   

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