June 20th Market Overview

Happy Friday, hello weekend!

Honestly, I'm not sure what to make of today.
Waller comes out talking July cuts while Powell was all cautious just two days ago. The Fed can't seem to get their story straight, which makes me think they don't really know what they want to do either.

Trump buying time with Iran helps for now, but two weeks isn't that long with bombs being dropped on cities. Also what's bugging me today is this chip waiver stuff. If they actually pull those, it's going to mess up a lot more than just Taiwan Semi.

Let's dig in...

Executive Summary

1. Home Depot jumped into a bidding war for GMS $GMS ( ▲ 0.59% ) , challenging QXO's $QXO existing offer and sending the building products stock flying.
   

2. Taiwan Semiconductor $TSM ( ▲ 0.51% ) led chip stocks lower after reports the U.S. wants to pull techn waivers that let companies access American tech in China.
   

3. Fed officials sent mixed signals with Governor Waller floating July rate cuts while Chair Powell stuck to his data-dependent stance from Wednesday.
   

4. Trump gives Iran two weeks for diplomacy before deciding on military action, cooling oil prices and lowering bets on U.S. involvement.

Market Overview

Key Market Drivers

1. The Fed can't get its story straight. Governor Waller told CNBC the central bank could cut rates "as early as July" and should "look through" tariff-driven price increases. That directly contradicts Chair Powell's careful Wednesday message about staying data-dependent.
   

2. Iran tensions dialed back, for now. Trump's two-week diplomatic deadline helped Polymarket betting odds fall from 63% to 45% on U.S. military involvement.
   

3. Chip companies face a policy curveball. U.S. officials want to pull the waivers that let Taiwan Semiconductor and others use American technology in China without individual licenses.
   

4. Other central banks are moving while the Fed waits. The Swiss National Bank just cut rates to zero and Japan plans to reduce bond issuance. Meanwhile, the Fed keeps debating whether to ease at all.
   

Stock Spotlight

GMS $GMS ( ▲ 0.59% ) was the day’s big winner after Home Depot $HD reportedly jumped in with a private bid to top QXO’s $QXO existing offer. The bidding war got other building materials stocks moving too.

Circle $CRCL ( ▲ 6.07% ) kept climbing after Tuesday’s Senate stablecoin bill passage. Seaport Global started coverage with a Buy rating, pushing a stock that’s already up over 500% since going public June 5.

Taiwan Semiconductor $TSM ( ▲ 0.51% ) dragged chip stocks lower after reports that U.S. officials want to cancel the waivers that let companies use American tech in China. Samsung and SK Hynix would get hit by the same policy shift.

CarMax $KMX ( ▼ 1.34% ) showed consumers are still buying used cars, beating Q1 earnings at $1.38 per share versus the $1.16 estimate. Revenue topped expectations too.

Big Name Updates

Apple $AAPL ( ▲ 0.52% ) is exploring AI tools to design its own chips, working with companies like Cadence Design and Synopsys to stay ahead of the competition.

Microsoft $MSFT ( ▲ 1.58% ) might walk away from OpenAI talks over stake disagreements. The company keeps its tech access through 2030 either way.

Nvidia $NVDA ( ▲ 1.33% ) is talking with Foxconn about putting humanoid robots in a Houston factory, expanding beyond just selling chips for data centers.

Tesla $TSLA ( ▼ 0.1% ) could miss Q2 delivery targets according to Barclays, which kept its rating unchanged ahead of Sunday’s robotaxi launch in Austin.

Other Notable Company News

PDD Holdings $PDD ( ▼ 0.37% ) is seeing Temu sales slow down in the U.S., with weekly revenue dropping over 25% year-over-year as the company cuts back on advertising.

Netflix $NFLX ( ▲ 0.96% ) got a big vote of confidence from Wells Fargo, which bumped its price target to $1,500 from $1,222.

Uber $UBER ( ▲ 1.72% ) is opening up its AI tools globally, letting other companies use the same tech it built for self-driving cars.

IONQ $IONQ ( ▼ 0.8% ) broke a quantum computing record by solving the biggest protein folding problem ever attempted on a quantum machine.

Sector Watch

Bond Market

Treasury demand remained resilient, pushing yields lower for the second consecutive week. The 10-year yield settled around 4.382%

• Safe-haven flows supported government debt despite inflation concerns
• Volatility climbed with the VIX reaching 20.88, reflecting continued unease
• Dollar stability contrasted with weakness in other major currencies

Policy Watch

The Fed can't get on the same page ahead of next week's congressional testimony. Governor Waller floated July cuts while Chair Powell stuck to his data-dependent line Wednesday. That puts Powell in an awkward spot when he faces lawmakers Tuesday and Wednesday.

• Chip waivers on the chopping block - Revoking semiconductor access to American tech in China would force Taiwan Semiconductor, Samsung, and others to apply for individual licenses. Expect longer waits, higher costs, and supply chain chaos.

• Iran gets two weeks for diplomacy - Trump's timeline is a clear market catalyst. Talks fail, oil goes up on war fears. Talks succeed, oil falls as supply concerns ease.

• Powell's testimony decides the Fed's direction - Congress will demand clarity on July cuts versus the slow approach. His answers determine whether markets bet on aggressive easing or stay cautious.
  

What to Watch

1. Powell faces Congress Tuesday and Wednesday: He'll get grilled about July rate cuts while Trump keeps attacking him publicly. His answers will either fuel July cut bets or kill them.
   

2. Tesla's robotaxi launch Sunday in Austin: Texas lawmakers want delays, but if Tesla $TSLA pulls this off, it validates the autonomous story and shows revenue beyond just selling cars.
   

3. Iran diplomacy over the weekend: Trump's two-week clock is ticking. Any escalation or breakthrough when European talks resume could swing oil prices and market mood Monday morning.
   

4. PCE inflation data Friday: The Fed's favorite inflation gauge will be crucial for July meeting bets. A hot number kills rate cut hopes, a cool one brings them back.
   

5. Chip waiver decisions coming: We need to know which companies lose China tech access and when. Taiwan Semiconductor $TSM, Samsung, and others are waiting to see how bad this gets.
   
   
   Thanks for reading 🙂
   
   - John
   

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