Good afternoon. 😀 We’ve got an exclusive interview with RSM Chief Economist Joe Brusuelas about the Fed meeting, which starts tomorrow. You’ll see Joe on the big TV networks, but why wait when you can be ahead of the herd and learn why he warns the upcoming release of the Fed’s Dot Plot could spark a sell-off in the markets? Also, discover why Apple’s AI reveal was a big 🥱 ho-hum on Wall Street.
📊 Monday’s Performance
4:00 PM EDT
🔥 The Fed’s Dot Plot Could Lead to a Market Sell-Off
RSM Chief Economist Joe Brusuelas tells Supernews that the Fed’s soon-to-be-released Dot Plot could ignite a sell-off as investors run for exits. "If it turns out the dot plot is implying only one rate cut, you will see a sell-off across financial markets," he warns. In an exclusive interview with Supernews, Brusuelas said the complexity of the current economic landscape underscores the Fed’s cautious approach to cutting interest rates.
The Federal Reserve FOMC two-day meeting starts Tuesday and the financial world is abuzz with speculation and anticipation. The likelihood of a rate cut in September has become a focal point, with the CME FedWatch Tool placing it at a roughly 49% probability. However, Brusuelas says, “I think it's appropriate that a little bit of risk aversion has crept into the federal funds market. And I think it really is right now, a coin flip on September,” Brusuelas said.
"The US economy continues to outperform expectations," Brusuelas notes, emphasizing that the Federal Reserve's cautious approach is warranted. With the economy generating approximately 230,000 jobs per month and the S&P 500 up 12.1% year-to-date, the Fed's strategy appears to be one of measured patience. "If we get one or two cuts this year, that will end up being quite good," he adds, suggesting that the market's initial expectations of more aggressive rate cuts were overly optimistic.
🚗 Why Musk’s $56B Deal Will Short-Circuit Tesla
Analysts warn that a failure to pass Elon Musk’s multi-billion-dollar pay package could short-circuit Tesla. The EV carmaker’s shares (TSLA) were trading down about 1% midday and closed down 2% ending at $173.79. Shareholders are set to vote on Thursday regarding the reinstatement of CEO Elon Musk's $56 billion pay package, which was previously nullified by a Delaware judge. Analyst Toni Sacconaghi from Bernstein noted that about 25% of eligible voting shares are held by passive shareholders who are likely to follow the "no" recommendation from Institutional Shareholder Services and Glass Lewis or by institutional investors who have already expressed opposition to the pay package.
Sacconaghi warned that if the pay package is rejected, Tesla's stock could potentially drop by more than 5% due to fears that Musk might leave the company. Conversely, if the vote passes, the stock is expected to respond positively, albeit in a more muted manner. He highlighted that Tesla has never seen turnout higher than 63% in a shareholder vote, and even with a higher turnout of 75%, Musk would need 73% of unaccounted-for voters to support his pay package.
➡️ Is Wall Street Sour on Apple’s AI
Apple’s bite at AI may have included some pits. Apple (AAPL) unveiled its long-awaited artificial intelligence features at the annual Worldwide Developers Conference in Cupertino, California, to which Wall Street rewarded the company with a an almost 2% drop in its stock. The tech giant introduced tools supported by OpenAI’s ChatGPT, aiming to deliver technology that is personalized, safe, and deeply integrated into its software ecosystem. The platform, named “Apple Intelligence,” will assist users in summarizing text, creating original images, and retrieving relevant data.
Apple also provided updates on its augmented reality headset, Vision Pro, which was a major highlight of last year’s conference. The new software update, visionOS 2, includes features such as turning regular photos into 3D images and new gesture controls. Despite the hype, sales of the Vision Pro have been sluggish.
In addition to Vision Pro, Apple introduced new software updates for its other products. The iOS 18 update for iPhones will allow users to customize and secure their applications, including a feature to lock individual apps. The iPadOS 18 will finally bring a calculator app to the iPad, along with a new floating tab bar and SharePlay features. The macOS Sequoia update will make it easier to mirror the iPhone on Mac computers, and the watchOS 11 will introduce a new Vitals app for health metrics and expanded cycle tracking features.
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