Let’s Make a Deal!
News Dominated by … SpaceX
This week – Fed rate Decision
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Warm-Up
- Let's Make a Deal!
- News Dominated by ... SpaceX
- This week - Fed rate Decision
- Need a new CTP (SPACEX?)
Markets
- Another V Formation - Nearing Highs again
- IPO Madness - Anthropic and OpenAi
- SpaceX IPO - could drain markets
- More AI valuations through the roof
DEDICATION: Stu Schifter - my good friend of 30 years passed away last night... battled Cancer for 2 years.
Market Valuations
- S&P 500 Forward P/E = 22.5
- 10-yr average = 19–20x
- Long-term average 18-19
- Not cheap, pricing in a lot of earnings growth.
- NASDAQ 100 forward P/E = 23-24
- 1-yr average ~23x
- 20-yr average ~20–21x
- Not screaming expensive on a forward basis
- - NOTE: Training P/E = 33-40
NEW Playbook
- But the Rumor and Buy the News
- used to be Buy the Rumor and Sell the News
- This is why there is an announcement about something and then a date to follow....
- Monday = Deal, Friday = signing
On that note
- What is the deal anyway?
- Seems that we (USA) moving out our navy before the final
- Straights of Hormuz opening -??
- Has anyone seen the text?
- We are no better than we were before all this started...
Headline Nonsense
- Fox Business: Beware the ticking time bomb hiding in your 401(k)
- Required minimum distributions can trigger taxes on Social Security benefits and boost Medicare premiums
- This is not a ticking time bomb. This is just reality when you have a lot saved and need to start withdrawals
- HOWEVER - there are ways around this and we have helped clients with this.
- - Listeners - if you have a 401k and think that you will be paying too much later on - we can take a look at the options...
More Retirement Alerts
- Social Security running out again....
- Less that 10 year until the reserves are exhausted
- The Social Security Administration’s newly released 2026 Trustees Report confirms that the federal retirement safety net is less than seven years away from fiscal depletion, as the Old-Age and Survivors Insurance (OASI) trust fund will completely exhaust its accumulated reserves in the fourth quarter of 2032.
- Once the reserve dries up, ongoing tax revenues will cover only 78% of scheduled retirement benefits, according to the report.
- Some of the blame is being laid on the OBBBA with higher standard deductions and lower taxes on SS Benefits
- "The OBBBA also adds a temporary additional standard deduction for taxpayers over age 65," it says. "As a result, less income tax will be paid on Social Security benefits, and the OASI and DI Trust Funds will receive lower levels of revenue in the future from income taxation of Social Security benefits."
PSA
- The Food and Drug Administration (FDA) has classified a recall of more than 900 cases of Alfredo sauce at its highest risk level after a supplier recalled a dry milk powder ingredient used in the product due to potential salmonella contamination.
- The FDA designated the recall as a Class I event, its most serious classification, meaning there is a reasonable probability that use of or exposure to the product could cause serious adverse health consequences or death.
- The Coffee Connexion Co., Inc.
- According to the FDA, the product was distributed in Alabama, Arkansas, Arizona, California, Colorado, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Massachusetts, Maryland, Maine, Michigan, Minnesota, Missouri, Mississippi, Montana, North Carolina, Nebraska, New Hampshire, New Jersey, New Mexico, New York, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Washington, Wisconsin and Wyoming.
Monday Markets
- 5:45PM Sunday night we see an announcement that there is a Deal!
- Why 5:45PM????????
- Futures rally, oil drops
- This is just days after the market already surged after a Truth Social post last Thursday that said that the US will "soon" sign a deal with IRAN
---- That pushed up markets quite a bit too
- Buy the rumor and buy the news...
Reality Check
- Thursday: Trump told reporters in the Oval Office that “we have a deal that Iran will never have a nuclear weapon.”
- Monday: 60-day period delay to continue discussions of nuclear issues
- Is there a sucker in all of this?
$ for IRAN
- Supposedly there i some deal...
- A $300 billion private fund designed ?to trigger investment into Iran is outlined in the U.S.-Iran framework agreement and more than half that sum has already been committed, a source with ?direct knowledge of the deal told Reuters.
- The fund is designed to give both sides an economic incentive to conclude a final deal, said the source, who spoke on condition of anonymity because the plan has not yet been announced as Washington and Tehran prepare to sign on Friday.
SpaceX
- IPO - Finally!
$135 per share - Rose to $160+/- on the debut day
- Rather smooth process and very orderly
- A total of $85B was raised - due to an add-on additional green-shoe that was allowed ($10B) for institutions.
- Rose another $20% on Monday
- Retail got about 20% of the deal (down from 30%)
Oracle
- Oracle Corp. shares declined after the company reported quarterly capital expenses that were higher than estimates, raising investor concerns about the profitability of the AI infrastructure business.
- The company expects to spend about $70 billion on net capital expenditures in the current fiscal year, and plans to raise another $40 billion in equity and debt.
- Oracle's cloud infrastructure business gained 93% to $5.8 billion, and total cloud revenue is projected to jump about 61% in the quarter ending in August.
- The increase of $5B over the course of the year was disconcerting to investors.
- Shares dropped the most in over 6 months on the news
CPI and PPI
- May CPI was mixed but generally cooler on the core reading, with headline CPI up 0.5% month-over-month, matching consensus, while Core CPI rose 0.2%, below the 0.3% consensus and below Briefing's 0.4% estimate.
- The softer core CPI reading suggests some easing in underlying consumer inflation pressures, which is the more constructive part of the inflation picture.
- May PPI was firmer than expected on the headline reading, with PPI up 1.1% versus 0.7% consensus and 0.8% Briefing estimate, matching the prior month's revised 1.1% pace.
- Core PPI rose 0.4%, matching consensus and coming in below the prior month's revised 0.7%, indicating wholesale inflation remained elevated but did not accelerate further on the core measure.
- Taken together, the CPI and PPI reports point to a mixed inflation backdrop: consumer-level core inflation looked somewhat better, but producer-level price pressures remained sticky.
Cyberdyne
- Anthropic announced Claude Fable 5, a Mythos-class model that will be available to its enterprise customers and paid subscribers.
- The company unveiled Mythos in April and has limited the rollout because of its advanced cybersecurity capabilities.
- Anthropic said Claude Fable 5?s broad release is possible because of new safeguards that block responses in specific high-risk areas.
- WAIT! The US government PULLED the plug on Mythos and Fable for any foreign national
- From Anthropic - The US government, citing national security authorities, has issued an export control directive to suspend all access to Fable 5 and Mythos 5 by any foreign national, whether inside or outside the United States, including foreign national Anthropic employees. The net effect of this order is that we must abruptly disable Fable 5 and Mythos 5 for all our customers to ensure compliance. Access to all other Anthropic models will not be affected.
OpenAi
- Confidentially flies for IPO
- Sends financials and IPO materials to regulators - making sue all in good order.
- This allows the company to iron out accounting, compliance, and regulatory issues in private without triggering a "media circus" or alerting competitors to their financials
Last Friday.....
- Nonfarm payrolls jumped a seasonally adjusted 172,000 for the period, down slightly from the upwardly revised 179,000 in April and far above the Dow Jones consensus estimate for 80,000.
- The unemployment rate held steady at 4.3%, as expected.
- Average hourly earnings rose 0.3% for the month and were up 3.4% over the past year, both in line with the Wall Street consensus.
Screwworm
- The New World screwworm has been detected in a 3-week-old calf in Zavala County, Texas, the first known case of that fly in the United States since 2017.
- New World screwworm larvae “burrow into the flesh of living animals, causing serious damage to livestock and economic losses,” the U.S. Department of Agriculture said.
- The USDA and Texas officials are taking immediate action to contain and eradicate the pest.
- In December, the Food and Drug Administration granted conditional approval to the topical solution Exzolt Cattle-CA1, which is used to prevent and treat New World screwworm infestations and is produced by Merck & Co.
- What is going to happen to beef prices?
Real Estate
- Nationwide, 5.8% of all home listings were pulled off the market in April, according to Redfin.
- Delistings were up 3.8% compared with March.
- Atlanta saw the highest share of homes come off the market in April, with 1 in 10 delisted. San Jose, California, followed with roughly 9% pulled, then Los Angeles (7.8%), Dallas (7.8%) and Seattle (7.7%).
In other news....
- The Japanese city of Utsunomiya has suspended all 94 of the primary and middle schools ?that it operates on Monday after its ?first-ever bear sighting, a municipal official said.
- The city of half-a-million residents about 100 km (60 miles) north of Tokyo said ?the bear was first seen in a residential ?area near a park on Saturday evening. It ?remains at large after the last sighting early ?Monday morning about half a kilometre from a ?middle school.
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