Deep Dive
Shownotes Transcript
Welcome to Seeking Alpha's Wall Street Lunch, our afternoon update on today's market action, news, and analysis. Good afternoon. Today is Tuesday, June 24th, and I'm your host, Kim Kahn. Our top story so far, Federal Reserve Chairman Jay Powell reiterated that the FOMC won't rush to cut interest rates as officials wait to see how President Donald Trump's tariffs shake out.
In his opening statement to the House Financial Services Committee, Powell said, "For the time being, we are well positioned to wait and learn more about the likely course of the economy before considering any adjustments to our policy stance." He noted the effects of tariffs will depend, among other things, on their ultimate level.
Mirroring comments he made last week, the Fed chief said the impact of tariffs on inflation could be temporary or maybe more persistent, depending on the size of the tariff effects, on how long it takes for them to pass through fully into prices, and, ultimately, on keeping longer-term inflation expectations well anchored. Expectations of that level, and thus the related economic effects, reached a peak in April and have since declined, he said. Even so, increases in tariffs this year are likely to push up prices and weigh on economic activity.
Also today, Cleveland Fed President Beth Hammock had some hawkish comments to counter the recent dovish Fed speak we've seen. In a speech at the Barclays CEPR Monetary Policy Forum in London, Hammock said that she doesn't see the U.S. economy weakening enough to, quote, merit imminent rate cuts, but she remains attentive to that possibility.
Looking ahead, if both sides of our mandate come under pressure, then holding the policy rate steady for some time may be the best choice to balance the risks coming from further elevated inflation and a slowing labor market, she said.
In morning data, consumer confidence saw an unexpected decline in June. The conference board's measure dropped to 93 from 98.4 in May, revised from 98, weaker than the 99 consensus. The June print erased almost half of May's sharp increase. Both present situation and expectations fell. Average 12-month inflation expectations eased to 6% from 6.4% in May and 7% in April.
Looking at geopolitics, attention remained on the Mideast amid what looks like a very fragile truce between Israel and Iran, with both countries now saying they will respect a ceasefire if the other side does. Earlier, Israel said it destroyed a radar installation near Tehran, despite Trump's command to hold off. Israel said its move was in response to Iran's violations of the ceasefire, but added that, following a conversation between Trump and Prime Minister Benjamin Netanyahu, it would refrain from further attacks.
Trump said he wasn't happy with either country. You know what? We basically have two countries that have been fighting so long and so hard that they don't know what the F they are doing, he said.
In trading, stocks are up but well below the highs futures hit when Trump announces ceasefire, and trading is choppy. The S&P 500 is up around 1%. Crude oil is down about 5% after Trump said that China can continue to buy oil from Iran, an indicator that the administration may ease its maximum pressure campaign on Iran alongside the new ceasefire agreement with Israel. More than 90% of Iran's oil exports are already going to China, often through unofficial channels and small independent refineries.
Nearly half of China's total oil imports pass through the Strait of Hormuz.
Among active stocks, Morgan Stanley named Chewy as a top pick in the internet sector after analyzing the addition of clinics to the company's growth story. Vet clinics were highlighted as being about a $40 billion market in the U.S., which is about 25% of the overall pet total addressable market that Chewy had limited access to before. Looking ahead, Morgan Stanley sees the clinic segment as a structural accelerant for the multi-year Chewy growth outlook with a high likelihood of success.
Krispy Kreme is under pressure after the company announced that a joint decision was made with McDonald's to end their partnership, effective July 2nd. Krispy Kreme CEO Josh Charlesworth said efforts to bring costs in line with unit demand were unsuccessful, making the partnership unsustainable for the company.
And Teladoc Health is rallying for the second consecutive session after Citron Research issued a bullish report on the telehealth firm, arguing that it is a coiled spring at the current market cap. At a $1.4 billion market cap, Teladoc is not getting a full value as the largest telehealth provider, as they are still paying the price of acquisitions of old. But all that is about to change, Citron Research said. AI will make this a more profitable business, and its scale cannot be replicated for its market cap. In
In other news of note, U.S. auto safety regulators are investigating reports that Tesla's self-driving robo-taxis may have violated traffic laws on their first day of offering paid rides in Austin. The National Highway Transportation Safety Administration said it is aware of reference incidents and is in contact with the manufacturer to gather additional information. Videos shared online show Tesla robo-taxis exceeding the speed limit and in one instance swerving into the wrong lane. The
The agency noted that it does not pre-approve new technologies or vehicle systems. Rather, manufacturers certify that each vehicle meets NHTSA's rigorous safety standards, and the agency investigates incidents involving potential safety defects. Following an assessment of those reports and other relevant information, NHTSA will take any necessary actions to protect road safety.
That's all for today's Wall Street Lunch. Look for links for stories in the show notes section. Don't forget, these episodes will be up with transcriptions at SeekingAlpha.com slash WSB. And join the elite community of real investors to unearth great investing ideas. Just head to SeekingAlpha.com slash subscriptions.