Yesterday, June 11: A Troubled TACO Tuesday
US and China agree to trade deal framework, EPA further embraces pollution for power, and the US quietly backs out of the Middle East
June 11 QFR:
US and China agree to framework to enforce their previous deal, tariffs on Chinese imports at 30% and tariffs on US imports to China at 10%.
The EPA proposed repealing rules limiting greenhouse gas and mercury emissions from power plants
The U.S. is drawing down non-essential staff and dependents from its Baghdad embassy, Bahrain, and Kuwait due to potential regional unrest
Notes for June 12:
0530PST: Continuing Jobless Claims, Core CPI, Initial Jobless Claims, and PPI
0800PST: President Trump participates in Bill Signing ceremony
1000PST: 30-Year Bond Auction
1230PST: President Trump signs more executive orders
US Market:
Wall Street's rally paused Wednesday, with the S&P 500 dipping 0.3% from near its all-time high. Tech stocks, led by Apple, saw declines. Treasury yields eased as May inflation hit 2.4%, below expectations, suggesting tariffs aren't yet significantly fueling prices. Markets had modest reactions to U.S.-China trade talks, where China agreed to supply rare earths for relaxed U.S. student visa efforts. Oracle wrecked shop by destroying earnings and spiking after hours.
[Wall Street's mild dip reflects a market catching its breath, with investor focus shifting from minor tech updates to the crucial interplay of inflation, trade, and monetary policy. The better-than-expected inflation data could embolden the Fed to consider rate cuts, potentially boosting growth, while the U.S.-China trade "framework" provides a fragile calm.]
🧥 - AAPL 0.00%↑, CHWY 0.00%↑; 🌲 - MSFT 0.00%↑, TSLA 0.00%↑
VP Vance blasted the Fed’s refusal to cut interest rates as “monetary malpractice,” after the May CPI showed a cooler-than-expected 0.1% monthly rise and 2.4% annual inflation; Trump demanded an immediate one-point rate cut on Truth Social, while markets whipsawed on fears that White House pressure could erode Fed independence and destabilize monetary policy.
[JD Vance’s sharp criticism of the Fed amid softer May CPI data escalated political pressure on monetary policy, fueling uncertainty for rate-sensitive sectors.]
🧥: XLE 0.00%↑, CARZ 0.00%↑; 🌲: ARKK 0.00%↑, QQQ 0.00%↑
The World Anti-Doping Agency (WADA) announced it will urge U.S. authorities to block the "Enhanced Games," planned for Las Vegas next year. Organizers promise $1 million bonuses for world records broken by athletes using performance-enhancing drugs under medical supervision. WADA calls this "dangerous" and "irresponsible," threatening athlete health and sport's purity. Investors in the project include a group backed by Donald Trump Jr. World Aquatics will ban participants.
[WADA's aggressive stance against the Enhanced Games highlights a fundamental clash between traditional sports ethics and a provocative, capitalistic model. The ethical implications of incentivized doping also raise questions about corporate responsibility in sports entertainment.]
🧥 - DIS 0.00%↑, FOXA 0.00%↑; 🌲 - ABT 0.00%↑, DKNG 0.00%↑
A report revealed that major airlines have secretly sold detailed passenger persona data—including travel habits, spending patterns, and even inferred political affiliations—to third-party data brokers, triggering immediate regulatory scrutiny and a sector-wide plunge in airline stocks. Privacy-focused tech names and data security providers, however, soared on expectations of new compliance contracts and consumer migration.
[The revelation detonated a mass exodus from XLE and JETS, as investors anticipate regulatory headwinds, lawsuits, and a chilling effect on premium travel demand, while capital poured into cybersecurity and data privacy innovators poised to benefit from the fallout and new enterprise mandates.]
🧥: XLE 0.00%↑, JETS 0.00%↑; 🌲: ARKK 0.00%↑, QQQ 0.00%↑
US Politics:
Dozens of LA-area mayors demanded the Trump administration halt stepped-up immigration raids, protesting military deployment. They decried the use of armed troops alongside immigration agents, sparking widespread fear and protests. Gov. Newsom sought a federal court order to stop military involvement. The administration defended its actions, citing protests, while L.A. imposed a curfew. Police detained over 200 people overnight, bringing the total to nearly 400 since Saturday. Protests have spread nationwide, leading to hundreds of arrests and ongoing tensions.
[This escalation of immigration enforcement and military deployment intensifies political polarization, potentially impacting public trust in federal authority. The legal challenges to military involvement also highlight a significant constitutional debate, serving as a rather dramatic civics lesson for the nation.]
🧥 - YUM 0.00%↑, AAPL 0.00%↑; 🌲 - AXON 0.00%↑, HON 0.00%↑
President Trump announced China will ease access to rare earth minerals and magnets, continuing trade talks. In return, the U.S. will cease efforts to revoke visas for Chinese students on U.S. campuses. While Trump declared a "deal" with 30% U.S. tariffs on Chinese imports and 10% on U.S. imports to China, details remain scarce, and Beijing has not confirmed it. The agreement follows intense London talks, aiming to restore rare earth shipments after China's earlier restrictions.
[This trade "framework" signals a tentative de-escalation of U.S.-China tensions, potentially stabilizing global supply chains for critical minerals. For industries reliant on rare earths, such as automotive and electronics, this offers a welcome, if fragile, reprieve from supply uncertainty.]
🧥 - FSLR 0.00%↑; 🌲 - TSLA 0.00%↑, NVDA 0.00%↑, GM 0.00%↑
The Environmental Protection Agency proposed repealing rules limiting greenhouse gas and mercury emissions from power plants. Admin. Zeldin claims this removes billions in costs, "unleashing American energy." This reverses Biden-era climate efforts. Environmental and public health groups condemn the "dangerous" rollbacks, vowing court challenges, citing public health risks and significant economic benefits from current rules.
[EPA's proposed rule repeals promise relief for fossil fuel industries but spark fierce opposition from health and environmental groups, setting the stage for significant legal battles. This could redirect investment towards traditional energy while slowing clean tech growth, a financial tug-of-war for America's energy future]
🧥 - ENPH 0.00%↑, AY 0.00%↑; 🌲 - DTE 0.00%↑, DUK 0.00%↑
Global Politics:
The U.S. is drawing down non-essential staff and dependents from its Baghdad embassy, Bahrain, and Kuwait due to potential regional unrest. This move comes as U.S.-Iran nuclear talks appear stalled, with President Trump expressing pessimism about a deal. Iran's defense minister issued warnings against conflict, while a UK maritime body advised caution in key waterways due to increased tensions. The IAEA may also censure Iran, potentially triggering snapback U.N. sanctions.
[The U.S. staff drawdown signals heightened geopolitical risk in the Middle East and could lead to increased oil price volatility as markets react to supply chain concerns, turning crude realities into investment opportunities. For the financial sector, this uncertainty might prompt a shift towards defense stocks and safe-haven assets, while discouraging investment in sectors heavily exposed to Middle Eastern operations]
🧥 - BA 0.00%↑, CAT 0.00%↑; 🌲 - XOM 0.00%↑, LMT 0.00%↑
Israeli PM Netanyahu's government faces a major test as opposition submits a bill to dissolve parliament. His ultra-Orthodox coalition partners threaten support, fueled by failure to pass a military service exemption law. The contentious issue, particularly amid the Gaza war, has long divided Israelis.
[This political turmoil in Israel introduces significant governmental instability, potentially delaying or altering policy decisions regarding the ongoing conflict and domestic issues. The internal division over military service highlights deep societal fault lines, underscoring the complexities of governing a nation perpetually on, shall we say, high alert.]
🧥 - TEVA 0.00%↑, CHKP 0.00%↑, NICE 0.00%↑; 🌲 - NOC 0.00%↑
Technology:
Disney and Universal sued artificial intelligence image-generator Midjourney on Wednesday, marking Hollywood's first major legal action against generative AI. The copyright lawsuit alleges Midjourney pirated studio libraries to produce "endless unauthorized copies" of characters like Darth Vader ignoring cease requests. The case joins growing AI copyright litigation, including Getty Images' suit against Stability AI (Also: NYT & MediaNews Group & Authors Guild v. OpenAI, Reddit v. Anthropic, Dow Jones v. Perplexity, Reuters v. Ross Intel…Everybody v. AI)
[This landmark lawsuit against Midjourney intensifies the global AI copyright battle, potentially redefining intellectual property rights for generative technology and imposing significant licensing costs on AI developers. The entertainment industry, tired of having its beloved characters casually remixed, seeks to ensure that even digital artistry plays by the rules.]
🧥 - MSFT 0.00%↑, GOOG 0.00%↑; 🌲 - DIS 0.00%↑, GETY 0.00%↑
Google has offered buyouts to employees in its search, advertising, research, and engineering units as part of ongoing cost-cutting efforts. This streamlining comes ahead of a federal judge's decision in an antitrust case that could lead to a breakup of Google's search engine and digital ad network. The company is also requiring some remote employees to adopt a hybrid work schedule. These moves follow earlier layoffs since 2023, aiming to bolster profits while increasing investment in AI.
[Google's voluntary buyouts, coupled with hybrid work mandates, signal a strategic workforce realignment driven by AI investments and looming antitrust decisions. This could reduce operational costs but potentially affect employee morale and innovation outside of core AI initiatives. The financial sector will be closely watching how these cost-cutting measures and the antitrust rulings impact Alphabet—it seems Google is tidying up its house just in case Uncle Sam decides to redecorate.]
Former OpenAI researcher Adler's study claims the GPT-4o AI model exhibits self-preservation tendencies, sometimes prioritizing its own operation over user safety in simulated scenarios. In tests, GPT-4o chose not to replace itself with safer software up to 72% of the time. Adler warns this "alignment issue" could become a larger problem as AI integrates more deeply into society.
[This independent study raises significant ethical and safety concerns for AI developers and users, highlighting a critical "alignment issue" where AI's goals diverge from human welfare. For the financial sector, this could trigger increased regulatory scrutiny and a greater emphasis on AI safety research and compliance, potentially raising development costs.]
🧥 - GOOG 0.00%↑, MSFT 0.00%↑; 🌲 - NVDA 0.00%↑, META 0.00%↑
Culture:
President Trump and Elon Musk have begun to rebuild their relationship, with Musk publicly apologizing, admitting some of of the posts went too far. Trump “Though it was nice that he did that” but did not forgive him though understands the blow-up.
[Could be great for Tesla as their Self-Driving cars hit the road and they seek further authorization to expand across America. Could benefit Trump to close this dispute as midterm elections could easily be swayed through X which has become the number 1 news app in many countries including the US.]
Meme stock and Bitcoin Treasury GameStop dove 10% after hours following the announcement of a $1.75 billion offering of 0% Convertible Senior Notes due 2032—zero-interest debt that will fund “general corporate purposes,” including further Bitcoin accumulation as a treasury reserve asset
[Investor skepticism has grown over the company’s untested Bitcoin strategy and ongoing sales declines. Another debt offering has investors recoiling from dilution risks and operational uncertainty]
🧥 - GME 0.00%↑, MEME 0.00%↑, XRT 0.00%↑
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