June 18th Pre-Market Brief

Good Morning

The Fed scared everyone yesterday and today we're buying it all right back.

This market wants to go up. Chips are leading on the Intel and Apple news, oil keeps sliding, and the VIX is back under 17. Today is the biggest options expiration on record, so part of this bounce is market mechanics, not conviction. It’s still early but market is looking nice and green at open.

Let's dig in...

Today's Big Picture

1. Warsh Runs The Fed Dark
Warsh ran his first meeting yesterday and refused to publish his own rate forecast, something no Fed chair has done. He's also floating an end to the press conference after every meeting. Less guidance means more guessing, and the market hates guessing, that's why this was the worst Fed-day selloff under a new chair since 1994.

2. Intel And Apple Tie Up On U.S. Chips
Trump posted that Apple will work with Intel to design and build chips in America, and that one line is dragging the whole chip sector higher before the open. The post is new, but the talks aren't, the Journal flagged a preliminary manufacturing deal back in May. The part to sit with is the government's stake. Washington took 10% of Intel last year near $100 billion, and with Intel now past $600 billion, that position is worth around $60 billion.

3. Apple's Price Warning Is The Fed's Problem Too
Tim Cook told the WSJ that price hikes are now unavoidable, calling the memory crunch a hundred-year flood. The cause is the same AI demand lifting Micron and Western Digital this morning, with chipmakers steering supply to AI servers and consumer gear footing the bill. Cheaper oil is cooling one source of inflation while this quietly heats up another.

Market Overview

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Stock Spotlight (pre-market)

Accenture $ACN ( ▼ 5.75% )  

Selling off after mixed results and a trimmed growth outlook, while closing a roughly $4.2 billion buy of three security firms. Now management has to show the deal adds growth instead of just covering for a slowing core, and the rest of IT consulting has to explain why their outlook is any better.

Smith & Wesson $SWBI ( ▼ 1.08% )  

higher on thin volume after a 27% jump in revenue, with new handguns driving market-share gains. That puts the pressure on rivals like Ruger to prove the demand is industry-wide and not just Smith & Wesson taking share.

SpaceX $SPCX ( ▼ 4.95% )  

Cooling after last week's IPO pop, slipping Wednesday for the first time while still holding a big weekly gain. The board just added Musk ally Roelof Botha, which leaves new shareholders deciding whether they're comfortable owning a name where Musk controls the votes and the company doesn't turn a profit yet.

Pfizer $PFE ( ▼ 0.46% )  

Slightly lower after CFO Dave Denton said he'll leave in August, with Cecile Guegan stepping in on an interim basis. That hands the next earnings call to an interim finance chief, and investors will want to hear the cost and pipeline targets reaffirmed before they give the stock a pass.

Carnival $CCL ( ▼ 3.2% )  

Getting a lift as oil keeps sliding and fuel costs ease, since energy runs straight through a cruise line's bottom line. That forces the bears who shorted travel on recession fears to decide whether cheaper fuel and a steady consumer have flipped the setup against them.

Western Digital $WDC ( ▲ 4.56% )  

Higher with the rest of the memory group as chip prices climb. The same squeeze padding its profits is the one Apple just blamed for unavoidable price hikes, so device makers are the ones now forced to either eat the cost or pass it to customers.

What to Watch

IPO’s

MarketBeat did an excellent job on this free IPO guide on IPO’s happening this year.

Iran Talks Open In Switzerland (Tomorrow)
The memo that stopped the fighting is signed, but the real deal isn't. Friday is when the U.S. and Iran start negotiating the hard parts, the nuclear program and sanctions, with Pakistan and Qatar mediating. We're closed for Juneteenth, so any headline lands with no place to trade it until Monday. If the talks break down or the bomb threats come back, oil gaps when we reopen.

Record Options Expiration (Today)
The largest options expiration ever clears today, bigger than last December's record, pulled forward a day for the holiday. When this much rolls off at once, the banks on the other side have to unwind their hedges, and that's mechanical buying and selling with no read on fundamentals behind it.

- John

Today’s Sponsor

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