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A huge week is setting up on the macroeconomic front, with the Federal Reserve and the European Central Bank both scheduled to decide on interest rates and update on monetary policy amid persistent inflation. The consensus view is that the ECB will lift interest rates by a quarter point and the Federal Reserve will stand pat. The big meetings arrive with market optimism ramping up in the early part of June. The recent rally has seen 10 of the 11 S&P 500 sectors push higher. However, a surprise from the central bank or the nail-biting inducing CPI and PPI reports could cool off bullish sentiment once again. The conference calendar includes high-profile AI events from Salesforce (NYSE:CRM) and AMD (NASDAQ:AMD), while Shell (NYSE:SHEL), BlackRock (BLK), and Home Depot (HD) also have investor events that could create a ripple in their respective sectors. The earnings calendar includes reports from Oracle (ORCL) (preview), Adobe (ADBE) (analysis), and Kroger (NYSE:KR) (analysis). The week ends with the simultaneous expiration of stock options, stock index futures, and stock index options contracts in a trader’s paradise known as triple-witching day.
Earnings spotlight: Monday, June 12 – Oracle (ORCL)
Earnings spotlight: Tuesday, June 13 – Iteris (ITI)
Earnings spotlight: Wednesday, June 14 – Lennar (LEN) and AMMO (POWW)
Earnings spotlight: Thursday, June 15 – Adobe (ADBE), Kroger (KR), and Jabil (JBL).
Volatility watch: Options trading volume is elevated in general on Akebia Therapeutics (AKBA), Icahn Enterprises (IEP), and Nikola (NKLA).
IPO and spinoff watch: The IPO market comes back to life with Cava Group (CAVA) set to price its offering and go public. The restaurant operators own the Cava Grill and Zoes Kitchen chains. Cava (CAVA) plans to sell shares for $17 to $19, which at the high end would value the fast casual eatery at $2.2B. Quiet periods expire during the week on Monogram Orthopaedics (MGRM), CaliberCos (CWD), and Strong Global Entertainment (SGE) to open up analysts to post ratings. IPO lockup periods expire on blocks of shares of Erayak Power Solution Group (RAYA) and Connexa Sports Technologies (CNXA) -96% from IPO.
Dividend watch: Companies forecast to boost their quarterly payouts include W. R. Berkley Corporation (WRB) to $0.11 from $0.10, Kroger (KR) to $0.28 from $0.26, and Caterpillar (CAT) to $1.26 from $1.20. Meanwhile, Redwood Trust (RWT) is on watch for a potential cut in its dividend payout rate. See Seeking Alpha’s list of Quick Dividend Stock Picks.
CPI preview: The consumer price index report will be closely watched with the shadow of inflation hanging over the market. Economists forecast a 0.4% increase in core CPI for May to match the level from April. Core CPI is seen being 5.3% in May in a slight moderation from the 5.5% pace in April. Headline CPI which includes food and energy prices is seen being up 4.1% in May. Bank of America expects a soft 0.1% month-over-month increase for food prices reflecting an increase in food away from home that should be partially offset by another decline in food at home. The firm anticipates May will mark the third consecutive decrease in food at from home prices as costs associated with groceries such as commodity prices, transportation, and storage continue to ease. However, food away from home prices are tipped to continue to increase given high labor costs and still strong demand. Seeking Alpha analyst Damir Tokic noted the disinflationary process in services and shelter has started, but from a very high level and at a very gradual clip. “The return to the 2% inflation target is unlikely without a deep recession with a significant increase in the unemployment rate,” he warned.
FOMC meeting preview: The Federal Reserve’s policy-making committee will hold a two-day meeting next week that will be the focal point of the markets. At publication time, trading on federal funds futures indicated a 72% probability the FOMC will hold rates steady for the first time in 15 months and a 28% chance of a 25-point hike. Some economists expect the Federal Reserve to leave policy on hold through December. “We expect May will end up representing the last hike of this cycle, as easing inflationary pressure, a slowing of labor conditions, and headwinds from reduced lending lead the FOMC to not later decide to resume hiking,” updated Nomura ahead of the meeting. Meanwhile, Bank of America thinks the tone from the Fed will be more akin to a “skip” instead of a clear signal of a prolonged pause. “While incoming data point to resilience in activity and stickiness in inflation, the Fed appears to desire additional time to monitor policy lags and regional bank stress,” noted the firm. The language in the FOMC statement and Chairman Jerome Powell’s press conference are likely to get even more attention than normal.
Corporate events: Salesforce (CRM) will hold an AI Day event on June 12 to discuss the future of trusted enterprise AI and present live demos. Amazon (AMZN) will hold its two-day AWS re:Inforce conference on June 13. Speakers at the conference will cover AWS topics, AI and machine learning innovations, and security updates. Also on June 13, investors events are scheduled for Dave & Buster’s Entertainment (NASDAQ:PLAY), Home Depot (HD), Impinj (NASDAQ:PI), and Ballard Power Systems (NASDAQ:BLDP). The AI spotlight also falls on AMD (AMD) during in-person and livestreamed event on June 13 to showcase the company’s growth strategy and expanding product portfolio and capabilities for data center and AI. Shell Plc (SHEL) will hold its Capital Market Day event on June 14. The oil giant is expected to discuss capital returns, dividend payouts, and strategies to improve profitability. Pure Cycle Corporation (PCYO) will host an investor meeting on June 16 to highlight the company’s progress in the water, land development and single-family rental segments. See a detailed list of key events for next week in Seeking Alpha’s Catalyst Watch.
Investor conferences: The conference schedule heats up just as the earnings calendar goes dry. Some of the bigger conferences to watch for Q2 guidance updates include the Oppenheimer 23rd Annual Consumer Growth and E-Commerce Conference, Morgan Stanley Financials & Payments Conference, Goldman Sachs Global Healthcare Conference, Deutsche Bank Global Auto Industry Conference, Evercore ISI Consumer and Retail Conference, and Wells Fargo Industrials Conference. The inaugural New Street Research Future of Transportation Conference will include appearances from Nvidia (NVDA), Uber Technologies (UBER), Infineon Technologies (OTCQX:IFNNY), Mobileye Global (MBLY), Wolfspeed (WOLF), Aurora (AUR), and Aeva Technologies (AEVA).
Quant ratings: Stocks with recent quant rating changes include ACV Auctions (ACVA) to Strong Buy from Hold, Dave & Buster’s Entertainment (PLAY) to Strong Buy from Hold, and Dollar General (DG) to Sell from Hold. See the stocks with the very highest rated Seeking Alpha Quant Ratings.
Barron’s mentions: “The focus this week was on how investors should play the bullish market vibe with the S&P 500 Index now up 19.5% from the low mark on October 12 of last year. “The notion that we’re in a bull market has become more compelling and harder to argue against,” noted Yardeni Research’s well-known market watcher Ed Yardeni. Other analysts have observed that a drop in earnings for the balance of 2023 appears to be already baked into share prices, while 2024 is anticipated to be a year of earnings recovery. The publication suggests that big bank stocks and oil majors could be at attractive levels ahead of a turnaround in the economy and a bull market with legs. Outside of the broad market guidance, TreeHouse Foods (THS) earned a callout this week as a stock that provides a way for investors to participate in the mega-trend of consumers turning to value and private-label food brands in particular.”
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