Weekly Market Update

Author : The BlackSummit Team
Date : June 15, 2024

Global Equities are Mixed

Global equities were mixed this week. The S&P 500 gained 1.69% while the Dow Jones fell -0.5%, and the Nasdaq increased 3.54%. The US 10-year Treasury note declined over the week, closing at 4.22%. Meanwhile, the price of a barrel of West Texas Intermediate crude oil rose to end the week above $78. Volatility, as measured by the CBOE Volatility Index, fell slightly over the week to 12.66 on Friday.

Inflation Cools but Fed Still Says Only One Cut

Inflation numbers came in cooler than expected, with the overall Consumer Price Index (CPI) remained flat in May compared to April, marking the first time in almost two years that it didn’t climb. The core index, which excludes food and energy, rose by 0.2%, the least since last October. The annual rate of inflation dropped to 3.4%, the lowest since April 2021. The Federal Reserve signaled that it would cut rates just once this year despite the welcome cooldown.

International Developments

G7 Announces New Financial Support to Ukraine, Putin Threatens the West

During the G-7 summit, President Biden and European leaders reached an accord to support Ukraine financially by utilizing the interest-frozen Russian assets. This agreement, representing a unified stance against Russian aggression, aims to provide economic stability and assistance to Ukraine amid ongoing tensions with Russia. By leveraging these assets to finance a loan of up to $50 billion, the international community intends to bolster Ukraine’s resilience and reinforce its sovereignty in the face of Russian threats. This collaborative effort underscores the commitment of Western powers to stand with Ukraine and address geopolitical challenges posed by Russia’s actions in the region. Meanwhile, Putin has warned the West that he could provide long-range weapons to other states to strike Western targets due to NATO allies allowing Ukraine to use their weapons to strike targets in Russian territory.

G7 Announces New Financial Support to Ukraine, Putin Threatens the West

EU Parliamentary Elections, Macron Calls Snap Elections After His Party’s Disappointing Result

The recent European Union parliamentarian elections have sent ripples of uncertainty throughout the continent, especially in France. In terms of numbers, the traditional centrist and pro-EU parties still hold 450 of the body’s 720 seats. The center-right European People’s Party has bolstered its position with 186 seats, positioning it to lead a governing coalition. While both the far-right and far-left saw gains, they lack sufficient numbers to form coalitions, nudging the EU parliament slightly rightward. French President Macron, responding to his party’s election setback, has opted to dissolve the National Assembly, a risky move for his political future. Macron’s centrist alliance secured only 15% of the vote, while the far-right National Rally, led by political rivals Marine Le Pen and Jordan Bardella, garnered 31%.

US Social & Political Developments

Trump Met with Congressional Republicans in First Visit to Capitol Hill since January 6

Former President Donald Trump returned to Washington Thursday to strategize for a potential second term in the wake of his criminal conviction and to solidify his influence within the Republican Party. He met with house republicans first and reportedly praised Speaker Johnson for the work he has done in the lower chamber. He then met with Senate Republicans claiming that Amid speculation about his political future, Trump aims to maintain his grip on the GOP and shape its direction. Meanwhile, the Biden-Harris campaign highlighted Trump’s last visit to the Capitol with an advertisement of the riot that took place on January 6^th.

Hunter Biden Appeals Felony Conviction

Hunter Biden, son of President Joe Biden, is expected to appeal his felony conviction for falsifying a federal firearms application, with the likely argument that the judge violated his constitutional rights with jury instructions, according to the New York Times. The appeal would be based on a 2022 Supreme Court ruling that vastly expanded gun rights. His lawyers will not be able to file an appeal until he is sentenced (expected in the next 120 days) or roughly a month before he is set to go on trial for federal tax charges in Los Angeles. President Biden has stated that he would respect the outcome of this case and continue to respect the judicial process if Hunter considers appealing the decision. The outcome of the appeal will likely have ramifications for both the Biden administration and the public perception of political influence in the justice system.

Corporate/Sector News

Mastercard’s and Visa’s Proposed Settlement over Swipe Fees Likely to be Rejected by Federal Judges

Federal judges are likely to reject a proposed $30 billion settlement by Visa and Mastercard, in what would be a major setback for the card networks in their 20-year fight against merchants seeking lower swipe fees. The settlement terms call for reduced swipe fees over the next three years, a capped rate for five years, and updated network rules that would allow more merchant freedom in how they accept digital payments. Credit and debit card swipe fees are the highest operating costs, except labor, for most merchants. The biggest loser if the settlement was to be rejected would be the card issuing banks, according to Seeking Alpha analysts.

Apple Partners with OpenAI to Bring ChatGPT to IOS 18

Apple and OpenAI has finalized terms that will allow Apple to use OpenAI’s ChatGPT features in its upcoming operating system IOS 18, as part of a larger effort to incorporate artificial intelligence (AI) in its products. It also signals to investors that Apple is relevant in the AI space as it competes with the likes of Microsoft. In January, Microsoft overtook Apple as the world’s largest company by market capitalization. The AI features were made public at Apple’s Worldwide Developer Conference this week.

CEO Elon Musk All-Stock Pay Package of $44.9 Billion Approved by Tesla Shareholders

Tesla shareholders have voted to restore a record pay package of $44.9 billion for CEO Elon Musk. The package is an all-stock option that had previously been invalidated by a Delaware judge earlier in the year. The package will likely remain in Delaware courts for several months as Tesla tries to overturn the judge’s previous decision. Tusk had warned that he would take AI development elsewhere if he did not receive at least a 25% stake in the company. Tesla has been negatively impacted by slowing demand for electric vehicles in the US as evidenced by declining sales and profit margins. Musk announced at Tesla’s annual shareholder’s conference that he is remaining with the company for at least another five years as he can’t sell any stock in his compensation package during that timeframe.

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The New-Old Authoritarianism by Ruth Ben-Ghiat

Putin’s Hidden Game in the South Caucasus

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