Hispanolistic
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CPI and core CPI rose less than expected in May. (0:15) Trump says deal with China done. (2:04) Quantum stocks rise on Nvidia CEO comments. (2:53)
This is an abridged transcript of the podcast:
Our top story so far, inflation dodged the tariff bullet again.
The May Consumer Price Index rose +0.1% M/M, less than the +0.2% consensus and the 0.2% increase in April. On a Y/Y basis, the measure grew +2.4% Y/Y, picking up slightly from the +2.3% increase in April, and less than the +2.5% consensus.
Core CPI, which excludes food and energy, rose +0.1% M/M vs. +0.3% consensus and +0.2% prior. That translated to a +2.8% Y/Y increase, unchanged from April's pace, and a tick lower than the +2.9% consensus.
The monthly print showed little sign of inflation from tariffs. The timing of any increase in prices from tariffs is difficult to predict. Also, declining imports, due to the tariffs, can mute the impact on inflation.
Seeking Alpha analyst Damir 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, moved slightly higher.
Skyler Weinand, CIO at Regan Capital, says: "The Fed is taking the summer off. They will come back in September with three more CPI and job prints in their data trove. If unemployment moves towards 5% and inflation is under 3%, they will likely cut at least 25bps in September. If we are staring down similarly soft inflation and solid jobs numbers to what we have now, the Fed will take another break until 2026 and revisit any potential rate cuts at that 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 the lows, with the 10-year yield (US10Y) around 4.45%.
The waters were muddied by President Donald Trump, pretty much at the same time as 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, according to MarketWatch’s Steve Goldstein). China's 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.
Among active stocks, Quantum stocks IonQ (IONQ), Quantum Computing (QUBT), D-Wave Quantum (QBTS), Arqit Quantum (ARQQ), and Rigetti Computing (RGTI) are all seeing buying after Nvidia (NVDA) CEO Jensen Huang made some bullish comments on the industry and said it is now at an “inflection point.”
Huang said during the GTC Paris event while mentioning Nvidia's quantum computing service Cuda Q, 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.”
Talen Energy (TLN) is rallying after expanding its nuclear energy relationship with Amazon (AMZN) to provide carbon-free energy from Talen’s Susquehanna nuclear power plant in Pennsylvania to Amazon Web Services data centers in the region.
Talen 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 (GTLB) is slumping after the DevOps company offered up guidance for the second quarter and full year that were slightly below Wall Street's expectations.
Looking to the second quarter, GitLab expects to earn between $0.16 and $0.17 per share, with revenue between $226 million and $227 million. The 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 (CHWY) is slumping on worries about full-year sales guidance. The company expects 2025 sales to be between $12.3 billion to $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 (TSLA) is "tentatively" set to begin offering its robotaxi service in Austin, Texas, starting June 22.
Musk said the date could change because Tesla is “being super paranoid about safety.” He emphasized that safety is a 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 remote human supervision.
The service is expected to gradually expand to other U.S. states later in the 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 that 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 support will help the economy avoid a recession and also see a mild recovery from late 2025 through 2026.
We expect "more positive forces to kick in late in 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.
