June 23th Market Overview

Happy Monday

Frustrating day today for me, was up at 4 a.m. for pre-market thinking I needed to get long volatility products and some oil.

I did… and then US military base was struck with Iranian missiles in Qatar. As soon as that happened Trump tweeted —>

"EVERYONE, KEEP OIL PRICES DOWN. I'M WATCHING!" and "To The Department of Energy: DRILL, BABY, DRILL!!! And I mean NOW!!!,"

Usually that's just noise right? This time though Oil immediately dropped 7.5% off those tweets. $USO ( ▼ 0.54% ) . It was also reported the air strikes had no US casualties as they gave Qatar a headsup before bombing the US base, market ripped up off these headlines. This signals to me they are just trying to save public face but don't want to do any real harm.

Today’s attacks by Iran were symbolic… more theater than threat.

Let's dig in...

Executive Summary

1. Oil crashed on Iran's restrained response: West Texas Intermediate fell to $68.75 in its biggest dollar drop since August 2022. Iran's missile strike on a US base was intercepted with zero casualties, removing fears of energy supply disruptions.
   

2. Fed rate cut talk gained steam: Governor Bowman became the second Fed official this week to signal support for July easing, pushing market odds from 14.5% to 22.7%.
   

3. Tesla rolled out robotaxis in Austin: The weekend launch of autonomous vehicle service drove shares higher as investors bet on long-term network potential.
   

4. Home sales beat expectations: May existing home sales rose to 4.03 million units despite remaining near historic lows, offering a rare bright spot in housing data.

Market Overview

Key Market Drivers

1. Iran Won't Bite The Hand That Feeds: Asian buyers take 69% of oil flowing through Hormuz. Attacking that route would hurt China, India, Japan, and South Korea - Iran's few remaining customers. Markets realized Iran can't afford to destroy its own revenue stream.
   

2. Retailers Won't Pass Tariff Costs: Bowman noted that twelve weeks after Trump's tariffs launched, stores still aren't raising prices on essentials. This gives the Fed room to cut rates without worrying about inflation. Two Fed officials backing cuts in one week shows momentum building.
   

3. Trump Takes Credit For Oil Drop: The President demanded lower oil prices on social media while futures were already falling. His posts show he'll use public pressure on both the Fed and energy markets to claim wins.
   

Stock Spotlight

Tesla $TSLA ( ▼ 0.1% ) gained after launching robotaxi service in Austin over the weekend. Elon Musk’s biggest autonomous vehicle bet is now live. Barclays noted scaling challenges, but investors see the upside of a self-driving taxi network.

Hims & Hers Health $HIMS ( ▲ 1.16% ) collapsed after Novo Nordisk NVO terminated their month-old Wegovy partnership. The Danish company cited “deceptive marketing” concerns, cutting off Hims’ access to the weight-loss drug.

Fiserv $FI ( ▲ 1.8% ) climbed after announcing a stablecoin platform for 3,000+ banking clients. The company partnered with Circle $CRCL ( ▲ 6.09% ) and PayPal $PYPL ( ▲ 0.37% ) for the digital asset push.

Big Name Updates

Apple $AAPL ( ▲ 0.73% ) is offering EU concessions on App Store rules to avoid fines. The company also signed a film deal with Peter Chernin’s North Road studio and became a major Taiwan Semiconductor packaging customer.

Dow $DOW ( ▼ 0.92% ) fell after BMO downgraded to underweight with a $22 target, down from $29. The firm sees weak end-markets and dividend cut risk.

AMD $AMD ( ▼ 0.43% ) gained on a Melius upgrade to buy with a $211 target, up from $135. The firm thinks markets are starting to value the GPU business properly.

Other Notable Company News

DoorDash $DASH ( ▲ 0.13% ) got upgraded to strong buy by Raymond James, which raised its target to $260 from $215. The analyst called it “Underpromise, Over-Deliveroo.”

Trump Media $DJT ( ▲ 3.6% ) fell despite a $400 million buyback plan. The company made just $8.8 million in revenue last quarter.

Ford Motor $F ( ▲ 0.3% ) executive called rare-earth magnet supply “hand to mouth.” The automaker keeps moving production around to avoid shutdowns.

Sector Watch

Bond Market

Yields Drop on Fed Dovish Signals 
The 10-year Treasury yield fell to 4.339% as Bowman's comments sent bond prices higher. Traders are positioning for the Fed's next move to be accommodation rather than tightening.

Yield Curve Dynamics 
The curve steepened slightly as short-term rates fell more than long-term ones. This reflects growing confidence that Fed easing is coming sooner rather than later.

Policy Watch

Political Pressure Intensifies 
Political heat on Fed Chair Jerome Powell ramped up as Trump ally Bill Pulte accused him of "bias" against the President. The Federal Housing Finance Agency director's social media attacks followed Trump's own sharp criticism of Powell's stance.

Fed Governors Signal Dovish Shift 
The timing is awkward. Two Fed governors in one week - Waller and Bowman - signaled openness to July rate cuts. Bowman noted retailers won't pass tariff costs to consumers, giving the Fed cover to ease despite Trump's trade policies.

Key Data Points-

• Powell testifies to Congress this week with dovish momentum building

• July rate cut odds jumped from 14.5% to 22.7% after Bowman's comments

• Bond traders bet the Fed's next move is cuts, not hikes • Political pressure clashes with data-driven policy decisions

What to Watch

1. Powell's Congressional Testimony: The Fed Chair testifies this week amid growing dovish sentiment from other governors. Watch whether he echoes Bowman and Waller's softer stance or pushes back against rate cut expectations.
   

2. PCE Inflation Data Friday: The Fed's preferred inflation gauge for May could cement or derail July rate cut hopes. A cooler reading strengthens the dovish case; a hot number forces a hawkish pivot.
   

3. Strait of Hormuz Shipping: Two oil tankers already made U-turns at the strait after weekend strikes. Any signs of Iranian forces moving toward the waterway or additional shipping disruptions could reverse today's oil crash.
   

4. Tesla Robotaxi Metrics: Early adoption data from the Austin launch will be crucial. Success or failure of initial operations could significantly impact autonomous vehicle valuations across the sector.
   
   
   Thanks for reading 🙂
   
   - John
   

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