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- Puck News | June 13th, 2024
Puck News | June 13th, 2024
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Today's insights are courtesy of Block Advisors, trusted by millions of small business owners for their year-round small business expertise
| Market | Day | Month | Year |
|---|---|---|---|
| Dow | ▼0.09% | ▼1.82% | ▲13.81% |
| S&P | ▲0.85% | ▲2.95% | ▲23.11% |
| Nasdaq | ▲1.53% | ▲5.81% | ▲27.80% |
| Bitcoin | ▲1.38% | ▲10.90% | ▲171.70% |
| 10-Year | ▲0.56% | ▲0.48% | ▼3.58% |
GOOD MORNING
Here's everything you need to know today: Inflation has eased with a 3.3% annual rise in May, prompting Federal Reserve Chairman Jerome Powell to hint at a potential rate cut in the fall. Despite the slowdown, Powell remains cautious, emphasizing the strength of the economy and ongoing inflation concerns.
Northrop Grumman’s political donations are raising questions due to its nonpartisan structure, which allows possible influence over political campaigns while maintaining separation from direct corporate funding. This strategy highlights the company's pragmatic approach to securing bipartisan support for its vast defense and technology projects.
Meanwhile, ARK Invest's latest report projects Tesla's stock price to reach $2,600 by 2029, driven by significant growth in its autonomous vehicle and energy storage sectors. This bullish forecast underscores Tesla’s transformative potential in revolutionizing transportation and energy markets.
Let’s dive into more detail below.
ECONOMY
Inflation Eases with 3.3% Annual Rise in May as Powell Hints at Future Single Rate Cut in the Fall
Powell remains cautious despite the slowdown, emphasizing the strength of the economy and ongoing inflation concerns
BREAKING NEWS
One of the biggest prints for the U.S. economy printed Wednesday morning only to show inflation actually slowed in May, with consumer prices up 3.3% from a year ago, slightly below expectations.
The consumer price index (CPI) held flat for the month, driven by a 2% drop in the energy index and minimal food price increases.
This deceleration in inflation highlights the ongoing economic adjustments, setting the stage for further analysis in the financial markets.
WHAT HAPPENED
The stabilization of the Consumer Price Index (CPI) was primarily driven by a 2% decline in the energy index and a minimal 0.1% rise in food prices. These figures were below market expectations, as economists had predicted a 0.1% monthly increase and a 3.4% annual rise. The core CPI, which excludes volatile food and energy prices, increased by 0.2% for the month and 3.4% year-over-year, again slightly below forecasts. This moderation in inflation prompted stock market futures to rise and Treasury yields to fall, indicating investor optimism about potential easing in monetary policy.
Despite the favorable top-line numbers, shelter costs continued to climb, increasing by 0.4% for the month and 5.4% annually, posing a significant challenge to the Federal Reserve’s efforts to control inflation. The persistent rise in housing-related costs, which constitute a substantial portion of the CPI, continues to complicate the FED’s inflation control measures. Within the energy sector, gasoline prices tumbled 3.6%, and motor vehicle insurance saw a 0.1% monthly decline, though it remained up more than 20% on an annual basis.
In the short term, the report’s immediate impact was a positive market response, with the Dow Jones Industrial Average gaining approximately 250 points and the 10-year Treasury yield dropping to 4.27%. This positive reaction suggests market confidence in the potential for the Federal Reserve to pause its interest rate hikes.
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DEFENSE
Northrop Grumman’s Political Donations Raise Questions
The company’s nonpartisan political action committee donation structure allows possible influence over political campaigns while maintaining separation from direct corporate funding
BREAKING NEWS
Recent data revealed Northrop Grumman, one of the world's largest aerospace and defense technology companies, continues its controversial strategy of donating equally to both major political parties.
With 95,000 employees and annual revenue exceeding $30 billion, the company has been splitting its political contributions 50/50 between Democrats and Republicans.
This bipartisan donation strategy raises questions about the company's motives and influence on U.S. political dynamics.
WHAT HAPPENED
Northrop Grumman's strategy of donating equally to both major political parties is most likely a calculated move to ensure its interests are protected regardless of which party is in power. This approach allows the company to maintain favorable relationships with lawmakers across the political spectrum, providing continued support for its vast defense and technology projects. With a history dating back to the early 20th century and numerous acquisitions, Northrop Grumman has positioned itself as a leading force in aerospace, cyber, land, sea, space, and advanced weapons. This broad reach necessitates a political strategy that secures bipartisan support, allowing the company to navigate the complex landscape of government contracts and defense funding.
Given its significant influence and financial power, Northrop Grumman's political contributions are critical to safeguarding its $36.6 billion in net sales and extensive operations across various domains. By hedging its bets with both parties, Northrop Grumman ensures that its initiatives, from unmanned systems and cybersecurity solutions to space exploration and advanced weapons development, receive the necessary legislative backing. This dual-sided strategy highlights the company's pragmatic approach to maintaining its market position and securing its role as a key player in national defense and technological innovation.
AUTOMOTIVE
Tesla’s Future Looks Bright According to ARK Invest, Projects $2,600 TSLA by 2029 Amid AI Innovations and Robotaxis
ARK Invest’s latest report highlights Tesla’s potential, driven by autonomous vehicle and energy storage sectors
BREAKING NEWS
ARK Invest projects Tesla’s stock price to reach $2,600 per share by 2029, driven by significant growth in its autonomous vehicle and energy storage sectors. Their latest report highlights Tesla’s potential to revolutionize transportation and energy markets. This bullish forecast underscores the transformative impact of Tesla’s innovations on its long-term market position and overall a nod of confidence in CEO Elon Musk.
WHAT HAPPENED
A key driver of this optimistic projection is Tesla’s anticipated dominance in the autonomous vehicle market, specifically through its robotaxi business. According to the report, nearly 90% of Tesla’s enterprise value and earnings in 2029 will stem from its robotaxi operations, highlighting the strategic importance of this sector. The report also suggests that electric vehicles will comprise a quarter of total sales, contributing around 10% to Tesla’s earnings potential. This shift underscores Tesla’s transition from a traditional car manufacturer to a multifaceted technology company.
The provided graphic from ARK breaks down Tesla’s expected revenue, EBITDA, and enterprise value by business line in 2029. It shows that the robotaxi business will account for 63% of revenue ($1.2 trillion), 86% of EBITDA ($440 billion), and 88% of enterprise value ($8.2 trillion). Meanwhile, electric vehicles will generate 26% of revenue and 10% of EBITDA, reflecting their continued importance to Tesla’s overall business model. Smaller contributions are expected from human-driven ride-hail, insurance, and stationary energy storage sectors. This breakdown highlights the substantial impact of the robotaxi segment on Tesla’s future financial performance and market valuation.
YESTERDAY | Here’s what you missed |
1. Musk says Tesla shareholder vote for $56 billion pay package passing by wide margins
Shareholders of electric-car maker Tesla are voting on a proposal to ratify CEO Musk's 2018 incentive package, valued at up to $56 billion at the time. A person familiar with the preliminary tally said Musk was correct on both counts.
2. Chinese EV stocks surge after EU slaps up to 38% additional import tariffs
Hong Kong's Hang Seng index surged 1.23% at the open, powered mostly by gains in EV stocks following the EU's decision to impose up to 38% additional import tariffs.
3. Roaring Kitty may have cut GameStop options position, strategists say
A surge of trading in some short-dated GameStop options contracts suggested to some market participants that Keith Gill, known as Roaring Kitty, may have sold part of his recently-disclosed options position.
4. Why Shari Redstone went cold on a Paramount sale to Skydance
The mogul's stunning eleventh-hour reversal came after a financial deal had been reached with David Ellison's Skydance Media. For now, the storied media company will attempt to go it alone.
5. Robotics startup cofounded by Synapse CEO is raising funds with exaggerated claims about GM ties
Foundation, started in April by Synapse CEO Sankaet Pathak, Tribe Capital CEO Arjun Sethi, and LeBlanc, cofounder of Cobalt Robotics, is raising funds with exaggerated claims about its ties to General Motors.
6. Blistering AI demand drives a beat and raise at our other chipmaker Broadcom
Broadcom reported strong earnings driven by high demand for AI, following in the footsteps of Nvidia and announcing a 10-for-1 stock split.
7. Trump Turns Bitcoin Into Test of Patriotism
Former president Donald Trump is now fully embracing Bitcoin, flipping his stance after saying he was "not a fan" of crypto five years ago.
8. OpenAI to use Oracle’s chips for more AI compute
OpenAI needs more AI chips than Microsoft can provide, leading the company to use Oracle's chips for additional AI computing power.
9. Meta VPs getting squeezed out amid Mark Zuckerberg's 'permanent' efficiency mode
The company formerly known as Facebook is looking to reduce the number of its vice presidents as part of Mark Zuckerberg's ongoing efficiency drive.
10. Southwest CEO will not resign, will consider input from activist investor Elliott
Southwest Airlines CEO Bob Jordan stated he will not resign despite pressure from activist investor Elliott Investment Management, but is considering amendments to the company's policies.
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