Inflation back on the Fed radar and expected to rise
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Welcome to Seeking Alpha's Wall Street Brunch, our Sunday look-ahead to this week's market-moving events, along with the weekend's top news and analysis.

Hello, today is Sunday, June 8th, and I'm your host, Kim Kahn. Inflation is back on the Fed's radar, with the Consumer Price Index up this week and a solid May jobs report in the rearview mirror. The May headline CPI is expected to have risen 0.2% on the month, with the annual rate rising to 2.5%, while the core rate is forecast to have risen 0.3%, rising to 2.9% annually.

Wells Fargo economists say the May CPI report will test whether April's potential signs of tariffs were early glimmers of inflation effects to come or more typical monthly noise. While May's consumer price index is not expected to deliver a standout increase, we look for inflation to pick up through the second half of the year, they added. Higher tariff rates lie behind the expected uptrend. We expect some of the tariff costs to be absorbed by our margins, which remain noticeably higher than before the 2018 trade war.

That said, as the higher tariff regime persists, shielding consumers from the cost is likely to become more challenging. We anticipate the three-month annualized rate of core goods inflation to peak around 4-5% in early fall, a little lower and later than our previous forecast published on May 8th, ahead of the 90-day pause on reciprocal tariffs on China. T.S. Lombard says,

The Fed is now shoved closer to policy being conflicted by employment and inflation moving in opposite directions. Normally, a preemptive move can be justified because employment lags growth and inflation lags employment. But these are not normal times. Everything Trump has done and is set to do leans inflationary. Biden's fiscal expansion helped move inflation and real rates higher, even though hiring rates are low and tariffs only add to Biden's impact.

Also this week, Apple is set to host its annual Worldwide Developers Conference starting Monday, and while last year's event focused on the promise of Apple intelligence, this year's event may be more geared on back-to-basics approaches.

Goldman Sachs analyst Michael Ng recently said that the keynote address is likely to focus on design improvements to its various operating systems, some information about its progress in artificial intelligence, and other less sizable announcements than in years past.

He's also expecting the next version of iOS to include a number of convenience-oriented features, and

including public Wi-Fi access syncing, AI-powered battery optimization, and more. Rosenblatt Securities analyst Barton Crockett said the event is likely to be low-key, with expectations lower than they have been previously, with minor updates likely to get the majority of attention. It's lean time for earnings, but GameStop reports on Tuesday analysts are expecting EPS of $0.04,

marking a notable improvement from a 12-cent loss in the same quarter a year ago. This potential return to profitability reflects the impact of aggressive cost cutting rather than top-line growth, making the sustainability of these savings a key focus for investors. GameStop also recently revealed that it had purchased 4,710 Bitcoins with a current estimated value of $513 million, or roughly 10% of its $4.7 billion cash reserve.

SeekingOff's contributor Macrogirl notes that this shift towards Bitcoin resembles a treasury strategy more than a retail turnaround, but argues GameStop is entering at near-peak levels, raising risks compared to early movers like Strategy. With declining sales, ongoing store closures, and unclear strategic direction, she maintains a hold rating, urging caution as the company's identity continues to evolve.

Also on the earnings calendar, Casey's General Stores, Calava Growers, and Late Land Industries report Monday. J.M. Smucker, United Natural Foods, and GitLab join GameStop on Tuesday. Oracle, Chewy, and SailPoint weigh in on Wednesday. Adobe reports on Thursday. In the news this weekend, Meta Platforms is in advanced discussions to invest potentially more than $10 billion into artificial intelligence startup Scale AI. Bloomberg says, if completed, the deal would rank among the largest private funding rounds in history. The

The terms remain in flux and no final agreement has been reached. Scale AI, founded in 2016 by Alexander Wang, provides data labeling services used to train machine learning systems. The company's technology underpins efforts by clients such as Microsoft and OpenAI, and it has emerged as a central player in the generative AI surge.

Its most recent funding round in 2024 pegged its valuation at approximately $14 billion. Earlier this year, a report suggested that the company was pursuing a tender offer that could value it as high as $25 billion.

And Microsoft will soon roll out a ranking system for artificial intelligence models based on their safety performance, offering a feature its cloud customers can use to assess AI products from the likes of OpenAI and China's DeepSea. The FT says the tech giant's model leaderboard, launched this month, will soon include a safety category which will rank a range of AI products from Elon Musk's XAI to France's Mistral.

Available for tens of thousands of Microsoft clients using the company's Azure Foundry developer platform, the leaderboard is expected to impact the demand for AI models and applications. For income investors, Alphabet goes ex-dividend on Monday, with a payout date on June 16th. Travelers goes ex-dividend on Tuesday, paying out on June 30th. Kohl's goes ex-dividend on Wednesday, with a June 25th payout date. And PIMCO goes ex-dividend on Thursday, paying out on July 1st.

And in the Wall Street Research corner, are early lows the friend of a bull? Carson Group's Ryan Detrick says it's possible to be down 15% year-to-date at some point and come back up double digits. The key, of course, is an early low, like we saw in 2009 and 2020 when both bottomed in March, he said.

This year could see a turnaround, much like 2009, a year after the 2008 financial crisis, and in 2020 when the COVID-19 crash hit. In both years, the markets had fallen more than 15% earlier in the year, but then eventually ended up rallying in double digits. 2025 bottomed in April, and the slingshot effect is in full motion, Detrick said. Check out a chart of the S&P performance when it's been down 15% year-to-date in our story on Seeking Alpha.

That's all for today's Wall Street Brunch. Look for links to 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.