Retail inflation shows little tariff impact
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Welcome to Seeking Alpha's Wall Street Lunch, our afternoon update on today's market action, news, and analysis. Good afternoon. Today is Wednesday, June 11th, and I'm your host, Kim Kahn. Our top story so far, inflation dodged the tariff bullet again.

The May consumer price index rose 0.1% month-on-month, less than the 0.2% consensus and the 0.2% increase in April. On a year-over-year basis, the measure grew 2.4%, picking up slightly from the 2.3% increase in April, but less than the 2.5% expected. Core CPI, which excludes food and energy, rose 0.1% on the month versus the 0.3% consensus and 0.2% prior.

That translated into a 2.8% annual increase, unchanged from April's pace, and a tick lower than the 2.9% expected. The monthly print showed little sign of inflation from tariffs. The timing of any increase in prices from tariffs is difficult to predict, though. Also, declining imports due to the tariffs can mute the impact on inflation.

Seeking Alpha analyst Demir Tokic says new vehicle prices decreased by 0.3% and apparel prices decreased by 0.4%, and both of these categories were subject to tariffs in May, and thus expected to rise. As a result, the May CPI data will be difficult to digest by economists and could add to the volatility in bonds and stocks.

On the Fed front, odds of two quarter-point rate cuts this year starting in September move slightly higher. Skyler Winans, CIO at Reagan Capital, says, The Fed is taking the summer off. They will come back in September with three more CPI and jobs prints in their data trove.

If unemployment moves towards 5% and inflation is under 3%, they will likely cut at least 25 basis points in September. If we are staring down similarly soft inflation and solid job numbers to what we have now, the Fed will take another break until 2026 and revisit any potential rate cuts at the time. The jury is still out on the economic effects from tariffs, he added. It will take one, maybe two more months for both the initial pull forward and eventual lag in demand to be crystallized and show up in the economic data.

In today's trading, stock index futures initially spiked on the cool retail inflation report, but eased back into the open. Treasury yields are off their lows, with a 10-year yield around 4.45%. The waters were muddied by President Donald Trump pretty much at the same time the CPI was released, saying that a trade deal with China was done, pending approval from himself and President Xi Jinping. The main deal appears to be China supplying rare earths and magnets in exchange for visas for Chinese students.

On tariffs, things were less clear, but Trump said the rate on China would be 55%, which could be 25% January tariffs plus 20% fentanyl tariffs plus 10% universal tariffs, according to Steve Goldstein at MarketWatch. China tariffs on U.S. goods are said to remain at 10%. That would be less of a trade truce and more of a reset to April levels before further escalation happened. Among active stocks?

Quantum stocks IMQ, Quantum Computing, D-Wave Quantum, Arquette Quantum, and Rigetti Computing are all seeing buying after NVIDIA CEO Jensen Wong made some bullish comments on the industry and said it is now at an inflection point. Wong said during the GTC Paris event, while mentioning NVIDIA's quantum computing service CudaQ, that the world is within reach of being able to use quantum computers, which use qubits as their unit of information, to be applied in areas and solve some interesting problems in the coming years.

Talon Energy is rallying after expanding its nuclear energy relationship with Amazon to provide carbon-free energy from Talon's Susquehanna Nuclear Power Plant in Pennsylvania to Amazon Web Services data centers in the region.

Talon will supply electricity to Amazon for operations that support AI and other cloud technologies at the AWS Data Center campus adjacent to Susquehanna with the ability to deliver to other sites in the state. GitLab is slumping after the DevOps company offered up guidance for the second quarter and full year that were slightly below Wall Street expectations. Looking at the second quarter, GitLab expects to earn between $0.16 and $0.17 per share, with revenue between $226 million and $227 million.

That midpoint of $226.5 million is slightly below the $226.58 million analysts were expecting, who also anticipated adjusted earnings of $0.16 per share. Full-year revenue is expected to be between $936 million and $942 million, with the $939 million midpoint slightly below the $939.7 million estimate.

and Chewy is slumping on worries about full-year sales guidance. The company expects 2025 sales to be between $12.3 billion and $12.45 billion. The midpoint of $12.375 billion is a hair lower than the consensus of $12.4 billion. In other news of note, Elon Musk says that Tesla is tentatively set to begin offering its robo-taxi service in Austin, Texas, starting June 22nd. He said the date could change because Tesla is, quote, being super paranoid about safety, unquote,

He emphasized that safety is top priority, and the launch date could shift if necessary due to ongoing safety checks.

The initial launch will involve a limited fleet of about 10 to 20 self-driving Model Y SUVs operating in a restricted area under some remote human supervision. The service is expected to gradually expand to other U.S. states later this year, with plans to include cities like Los Angeles, San Antonio, and San Francisco. These are unmodified Tesla cars coming straight from the factory, meaning that every Tesla coming out of our factories is capable of unsupervised self-driving, Musk said.

And in the Wall Street Research Corner, the Wells Fargo Investment Institute asserts that tariffs are a big tax hike, but the U.S. economy can stay resilient and avoid a recession. Strategist Jennifer Timmerman said the third biggest tariff hike in 60 years has been unexpectedly aggressive and, in our view, should be seen as a substantial tax increase. However, key supports will help the economy to avoid a recession and also see a mild recovery from late 2025 to 2026.

We expect more positive forces to kick in in late 2025, including tax cuts, lower short-term interest rates, and improved purchasing power from oil price declines, and solid real inflation-adjusted income growth, she added.

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 highest level discussion of any stock or ETF with our community of serious investors like you. Find us at SeekingAlpha.com slash subscriptions.