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, July 1st, and I'm your host, Kim Kahn. Our top story so far, Trump and Musk are back at it. Tesla is under pressure after CEO Elon Musk and President Trump bickered again on social media about the government tax and spending bill.
Following some complaints from Musk about the financial danger of the tax and spending bill and a teaser on starting a new political party, Trump said that, quote, Elon may get more subsidy than any human being in history, by far, and without subsidies, Elon would probably have to close up shop and head back home to South Africa. Which may, in a curious way, remind some old-school rap fans like me of Public Enemy's incident at 66.6 FM.
For his part, Musk said, "Every member of Congress who campaigned on reducing government spending and then immediately voted for the biggest debt increase in history should hang their heads in shame, and they will lose their primary next year if it is the last thing I do on this earth." In a separate post, Musk, who spent around $290 million backing Trump and other Republicans in the 2024 election, said that if the "insane spending bill passes, the America Party will be formed the next day."
Weighing in on the spat, Wedbush Securities analyst Dan Ives said the Musk-Trump soap opera remains an overhang on Tesla stock, with investors fearing that the Trump administration will be more hawkish and show scrutiny around U.S. government spending related to its companies, and most importantly, the regulatory environment key to the future of robo-taxis and cybercabs.
On the economic front, Fed Chairman Jay Powell raised some eyebrows on Wall Street by using what some saw as language that puts the possibility of a July rate cut in play. I really can't say if a July rate cut is too soon, he said at the ECB Forum on Monetary Policy. It depends on the data. But TS Lombard economist Dario Perkins says that was just a clumsy way of saying he didn't want to give any policy guidance. A, quote, solid majority of FOMC members expect to reduce rates later this year, Powell noted.
He added that the Fed will be watching very carefully for signs of unexpected labor market weakness, but today's labor market data seemed to support the case for waning, as the Jules report showed a second strong month in a row. The number of job openings in the U.S. jumped to 7.769 million in May from 7.395 million in April, well ahead of the 7.32 million consensus.
In addition, the layoff rate fell to a very low 1.1%. Pantheon Macro says all told, most FOMC members will see little reason to get behind Emerging Voices for July easing after May's jolts report. But the outlook remains likely for slowing growth in both wages and payrolls in the second half of this year, which we continue to think will steer the committee to ease by 75 basis points by December, most likely starting in September.
Among active stocks, Las Vegas Sands, Wynn Resorts, and Melco Resorts & Entertainment saw strength as Macau gross gaming revenue jumped 19% year-over-year in May to $2.6 billion. The GRR mark topped the consensus expectation for a rise of 9.4% and represented 88% of the revenue mark from the pre-pandemic year of 2019.
And Kroger was named one of Evercore ISI's best core ideas. The curated stock list is a compilation of the firm's top picks with a longer-term investment horizon. Crucially, Kroger is seen reaching 3% or higher in identical store sales into 2026.
In other news of note, Amazon has deployed its one millionth robot to a fulfillment center in Japan, close to the number of humans working at its facilities, as the e-commerce giant continues to expand the world's largest fleet of industrial mobile robots. Around 75% of the company's global deliveries are now assisted in some way by robotics, and its fleet spans more than 300 facilities worldwide.
According to a Wall Street Journal analysis, the average number of workers per Amazon facility last year, around 670, was the lowest recorded in the past 16 years. Meanwhile, they found that the number of packages shipped per employee each year increased since at least 2015 to about 3,870 from around 175, indicating productivity gains.
And in the Wall Street Research corner, still the tech bulls, Wedbush says tech stocks as a whole are likely to rise 10% or more in the second half of 2025, thanks in part to AI. The firm's top five picks are familiar names, Nvidia, Meta, Microsoft, Palantir, and Tesla. Analysts said, "...our bullish view is that investors are still underestimating the tidal wave of growth on the horizon from the $2 trillion of spending over the next three years coming from enterprise and government spending around AI technology and use cases."
In our opinion, after a relatively strong few months navigating tariff and geopolitical storms, now tech stocks are poised to see another 10% plus move higher in the second half of 2025, led by the tech winners in this golden age for the tech world, they 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 elite community of real investors to unearth great investing ideas. Just head to seekingalpha.com slash subscriptions.