Wall Strut

US equities pushed ever higher overnight, with the S&P500 delivering its 30th record high this year.

Wall Street gains have hardly ever been this lopsided as Mega Tech accelerates into the ether while other risk assets basically stand on the beach and watch.

It seems punters were unwilling or unable to sell in a thin market with Juneteenth National Independence Day being celebrated on the 19th – we could see something similar into the EOFY.

The S&P 500 hit a fresh record on Monday, bringing its year-to-date gain to more than 14%.

The great jostling bulk of those muscular gains comes from the usual seven suspect major US tech companies tied to AI, such as Mr Nvidia — who has more than tripled in weight so far this year.

Last week on Wall Street, the S&P500 (SP500)  clocked its best weekly advance in  six weeks largely on the back of surprisingly soft inflation data. The always exciting headline consumer price index for May came in flat in what was its first unchanged reading since July 2022.

For the week, the S&P500 added +1.6%, the blue-chip Dow (DJI) fell -0.5%.

The tech heavy Nasdaq Composite climbed a lazy +3.2%.

Artificial Inspiration

Over the past two years, the S&P500 Growth Index has surged by over 57%, surging beyond the broader  S&P500’s still exemplary 43% leap.

In the past four weeks the growth index has outpaced value by nearly 9%.

Nvidia Corp (NVDA) has added another fairly astonishing circa 37% after a busy month which included the Q1 earnings mega beat and stonking Q2 forward guidance, and it hasn’t missed a beat since the recent 10-for-1 stock split.

With generative AI driving robust sales in both infrastructure and SaaS layers, Nvidia is sitting pretty to continue swallowing up further market share and profit growth.

Down the road, Broadcom Inc. (AVGO), another cunning AI chip designer in the NVDA school of gen-AI, watched with glee the success of NVDA’s split and itself announced last week a 10-for-1 forward stock split which goes into effect in one month on July 16.

AVGO stock hit $1714 on Friday, 30% higher than the start of the month.

Via Google

Broadcom is starting to get its name up in lights on Wall Street as not a bad option on the alt-AI front – especially considering Broadcom’s revenue rose 43% year-on-year to $12.487bn, an easy beat on market’ expectations.

More significantly AVGO hoisted forward revenue guidance to $51 billion based on increasing demand for its AI chips.

The key here is – like NVDA – the company has some thrilling cash flow numbers and in a world of mighty valuations looks comparatively cheap, according to concensus expectations, even despite its recent stunning gains.


This ain’t no dot-com artifice says Charles Schwab

Out front of the US-tech trendsetters, AI-related companies are looking unflustered by the last 12 months of ever-increasing and undeniably eye-watering valuations.

But while fundamental factors around these names are supportive of their multiples, the market isn’t entirely free of fear, Charles Schwab chief investment strategist Liz Ann Sonders told US media overnight.

“AI and its enthusiasm — I think that’s very legitimate,” Sonders said. “At this stage in the game, the trajectory of earnings, you could argue, is supportive of valuations.”

In contrast to the dot-com bubble,  Sonders said the current AI rally has much stronger fundamental factors correlated to momentum such as strong free cash flow, high return on equity and profitability streams.

By comparison, the most highly correlated fundamental factor with momentum in the dot-com boom was negative earnings, she said.

And thus, the S&P500 on Friday clocked its best weekly advance in over a month, primarily on the back of surprisingly soft inflation data.

The headline consumer price index for May came in flat in what was its first unchanged reading since July 2022.

The consumer inflation data ended up overshadowing last week’s point of focus – the latest monetary policy decision out of the US Federal Reserve alongside the release of its luminous Summary of Economic Projections – the so-called dot plot.

The Fed held interest rates steady at a 23-year-high, but also trimmed expectation of rate reversals to just one 25 basis point from a prior forecast for three such cuts.


Wall Street is concentrating

Meanwhile, Chris Weston at Pepperstone says the price action and the technical set-up in US equity indices will be front and centre this week.

“If it hadn’t been for the rise and rise of Nvidia, Microsoft and Apple, then the US500 and NAS100 would have attracted far greater rewards for those positioned short.

According to Counterpoint Global, the so-called “Magnificent Seven” stocks –  Apple (AAPL), Microsoft (MSFT), Nvidia, Alphabet (GOOGL), Meta Platforms (META), Amazon (AMZN) and Tesla – currently account for circa 75% of the largesse generated in gains by the entire S&P 500 index.

The same seven playas were behind more than 50% of the S&P500’s total gains for calendar 2023.

Minus Elon’s TSLA, which is being driven more by Musky madness than any Elon-generated AI, those scary numbers would be even scarier

“Market breadth in the S&P500 is clearly deteriorating, and the index is hanging in by a thread, and that is throwing up greater short opportunities in single stock names, but such is the influence these three behemoth names have on both indices.”


Elon Watch

“I just want to start off by saying, hot damn, I love you guys! … We have the most awesome shareholder base. I mean it’s just incredible.”

Yep. Musk got his money.

Elon’s contentious pay deal was valued at about US$56bn when Tesla’s share price was peaking in late 2021, but has since ebbed by about a quarter.

Still. There was much rejoicing when all this happened late last week (Friday Sydenham time).

Here’s the actual news from last week’s annual love in.


Elon’s adroit use of threat worked wonders in this case – he simply threatened he’d jump ship from TSLA if shareholders didn’t give him what was due.

The legendary Wedbush tech analyst Dan Ives wrote on Friday that the decision to feed Elon his big bucks breakfast has unshackled a weight from around the neck of the TSLA share price.

“(The remuneration greenlight) removes a $20- $25 overhang on the stock in our opinion that has weighed on shares since the head scratching Delaware ruling set this Twilight Zone soap opera on earlier this year.”

Dan says that now the drama is over, Tesla could add as much as $350 over the next 12-18 months – that’d represent a circa +85% rise from the stock’s current price.


Dumb A.I. News


Ahh. We thought more Musk meets AI.

Elon is threatening Apple and fans of said company’s devices with a blanket ban from all of his companies  after the tech giant’s big “Apple Intelligence” reveal which is basically the incorporation of OpenAI’s Chat-GPT chatbot software with Siri.


Screenshot via Z. Sorry, X


When a user grants Siri permission, it can use ChatGPT to answer stuff that Siri can’t.

Elon’s complaining that using OpenAI’s Chat-GPT at the OS level raises security concerns for users’ data.

It’s also the kind of first mover tie-up that Musk himself appreciates on a commercial level.


APPL vs NVDA vs TSLA (year-to-date)

Via Google


Last week’s Top S&P500 Gainers

Broadcom (AVGO) +23%.

Skyworks Solutions (SWKS) +15%

Qorvo (QRVO) +13%.

Adobe (ADBE) +13%.

Arista Networks (ANET) +11%.

Last week’s S&P500 Laggards

Paramount Global (PARA) -15%

Aptiv PLC (APTV) -14%

Warner Bros. Discovery (WBD) -12%

Albemarle (ALB) -10%

PayPal Holdings (PYPL) -10%

US Futures on Monday night in New York


Via Fox


The Economic Calendar

Monday June 17 – Friday June 21

India, Indonesia, Malaysia, Philippines, Saudi Arabia,
Singapore, Turkey, UAE Market Holiday
China (Mainland) Industrial Production, Retail Sales, Fixed
Asset Investment, Unemployment Rate (May)
United States NY Empire State Manufacturing Index (Jun)

Indonesia, Turkey Market Holiday
Australia RBA Interest Rate Decision
United States Retail Sales (May)
United States Industrial Production (May)
United States Business Inventories (Apr)

US, Turkey Market Holiday
Japan Balance of Trade (May)
Japan BoJ Meeting Minutes (Apr)
United Kingdom Inflation (May)
South Africa Inflation (May)
Canada BoC Summary of Deliberations (Jun)
Brazil BCB Interest Rate Decision

China (Mainland) Loan Prime Rate (Jun)
Germany PPI (May)
Indonesia BI Interest Rate Decision
Switzerland SNB Interest Rate Decision
United Kingdom BoE Interest Rate Decision
United States Building Permits, Housing Starts (May)

US S&P Global Flash PMI, Manufacturing & Services
Japan Inflation (May)
United Kingdom Retail Sales (May)
Canada Retail Sales (Apr)
United States Existing Home Sales (May)
United States CB Leading Index (May)