June 18th Market Overview

Happy Wednesday.

Fed day delivered exactly what you'd expect, a whole lot of nothing wrapped in confusing language.

Powell held rates steady but basically admitted the economy might be heading into that ugly stagflation territory nobody wants to talk about. Growth forecasts down, inflation expectations up, yet they're still planning two cuts this year. Make it make sense?

I think the issue here is that they are being cautious until next quarters earnings season so they can start to asses the real world affects from the tariff damage before making any real rate cut claims.

Let's dig in...

Executive Summary

1. Fed's Mixed Signals: Rates held steady with two cuts still planned, but growth forecasts slashed to 1.4% while inflation expectations jumped to 3.1%. Powell wants to wait on tariff data before moving.
   

2. Housing down: New Construction starts down 9.8% to five-year lows. Add in Japan's 11.1% export drop to the US, and the economic momentum is clearly calming down.
   

3. Iran Talks Tough: State TV threatened a "surprise the world will remember," but markets mostly ignored.
   

4. Steel Deal Done: Nippon Steel closed its U.S. Steel $X ( ▼ 0.02% ) acquisition, ending the company's public NYSE run.
   

Market Overview

Key Market Drivers

1. Fed's Impossible Math: Powell wants to cut rates twice this year but just admitted growth is slowing to 1.4% while inflation heads to 3.1%. That's the stagflation combo investors hate most. The Fed is essentially saying "we'll cut when we can figure out what tariffs actually do to prices."
   

2. July 9 Becomes D-Day?: Every Fed decision now hinges on tariff impacts, and Powell admitted the size, timing and duration are "all highly uncertain." That makes the July 9 deadline for new tariffs on major trading partners the most important date on the calendar.
   

3. Old Guard Joins the Party: Legacy names like IBM $IBM ( ▼ 0.82% ) , Seagate $STX , and Raytheon $RTX hit all-time highs today.
   
   When companies that have been around since the 1960s start making new records, it can mean this rally has legs beyond just the usual tech names.
   

Stock Spotlight

Marvell Technology $MRVL ( ▲ 7.07% ) earned a $90 price target from Bank of America after guiding for $18-19 billion in AI data center sales by 2028. With 18 custom silicon wins versus just three last year, the firm believes Marvell is set to catch up with AI peers.

Cava Group $CAVA ( ▲ 5.56% ) saw Stifel reiterate its Buy rating, urging investors to buy the recent dip. While the firm trimmed its price target to $125, it still forecasts significant upside. Stifel believes average unit volumes will expand faster than anticipated as brand awareness grows.

McDonald’s $MCD ( ▲ 0.31% ) is heading for its fifth straight weekly loss and trading below its 200-day moving average after hitting the lowest level since February. This technical weakness comes ahead of second-quarter results scheduled for July 23.

Big Name Updates

Meta $META ( ▼ 0.68% ) reportedly offered OpenAI staff bonuses up to $100 million in an aggressive AI talent grab, though top talent didn’t move. Separately, Morgan Stanley sees WhatsApp ads becoming a $3-5 billion annual revenue opportunity.

Netflix $NFLX ( ▲ 1.32% ) is partnering with French broadcaster TF1 to stream traditional linear TV, including live sports, in France. This strategic move expands beyond on-demand content into the more linear television space.

JD.com $JD ( ▼ 1.46% ) founder Richard Liu called the last five years the company’s “darkest period” where it “lost its way.” He’s now spearheading a turnaround plan including entries into food delivery, travel, and European e-commerce by 2026.

Hasbro $HAS ( ▼ 0.39% ) cut 3% of its workforce, directly citing tariff pressure as a factor.

Other Notable Company News

Hims & Hers Health $HIMS ( ▲ 8.73% ) CEO teased a significant launch for tomorrow, stating it “took many years to perfect” and involves “industrial design of machines.”

Snowflake $SNOW ( ▲ 0.7% ) earned a reiterated Buy rating from Truist with a $235 price target, with analysts noting significant progress in AI offerings.

SanDisk $SNDK ( ▲ 1.07% ) received Buy coverage from Bank of America with a $61 target, based on improving memory pricing and favorable end market mix.

Sector Watch

Bond Market

Treasury yields were choppy but finished lower as markets digested the Fed’s mixed signals. The 10-year yield settled around 4.388%.

• The door remains open for rate cuts this year, providing some support
• Concerns about persistent inflation and slowing growth kept investors cautious
• The action reflects uncertainty about whether the Fed will prioritize fighting inflation or supporting a potentially weakening economy

Policy Watch

Fed vs. White House: President Trump renewed his criticism of Chair Powell just hours before the decision, calling him “stupid.” This public pressure campaign continues to test the central bank’s political independence.

• Bank Capital Rules: Regulators plan to ease a capital rule limiting banks’ Treasury trading ability, potentially boosting trading revenue at major banks

• Crypto Legislation: The Senate passed the “Genius Act” to regulate stablecoins, a key step toward clearer cryptocurrency regulatory framework

• July 9 Tariff Deadline: With the G-7 summit ending without new trade agreements, this deadline for higher tariffs on close trading partners becomes a major catalyst

What to Watch

1. Iran Peace Talks: Trump claims Iran wants to send a delegation to Washington and "even suggested they come to the White House." If real, this could quickly deflate oil prices and geopolitical risk premiums.
   

2. July 9 Tariff Bomb: The deadline for new tariffs on major trading partners. With G-7 talks going nowhere, this date now basically drives both Fed policy and market direction.
   

3. Hims Hardware Mystery: $HIMS ( ▲ 8.73% ) unveils something tomorrow involving "industrial design of machines" that took "years to perfect." Could be a major pivot for the wellness company.
   
   
   Thanks for reading 🙂
   
   - John
   

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