Where Are We Headed Today? Thus Spake Apple
Apple Inc. (NASDAQ:AAPL) came in line with iPhone sales expectations yesterday, and together with an earnings beat after market close, the upbeat report precipitated a huge sigh of relief from tech investors that resulted in a 1.3% climb for the Nasdaq (NASDAQ:QQQ) yesterday. Meanwhile, countervailing pressures in the dollar index have it continuing to climb short term (NYSEARCA:UUP), now at 15-week highs. The Federal Reserve is expected to raise interest rates in June now that inflation has finally reached the 2% upper limit as judging by the Personal Consumption Expenditures index released earlier this week. Do stocks have energy to carry forward the Apple momentum?
What’s that Musky Smell?
Whoever said that minor retail shareholders can’t challenge the most powerful debtor on Wall Street? Jing Zhao, a spunky Tesla Inc. (NASDAQ:TSLA) shareholder of all of 12 shares of stock and with just a bit of temerity to flavor his resume, has proposed to the Tesla board to remove Musk as Chairman and replace him with a director, because he shouldn’t be both CEO and Chairman, since that’s not the way most companies do it, and he owns 12 shares so he has a vested interest in this.
The board will vote (probably down) on Jing’s proposal on June 5. Musk would remain as CEO in any case and retain his compensation package valued at around $2.6 billion, whose value is based on the assumption that Tesla’s market cap will be $650 billion in ten years. Hey, if cryptocurrencies can make it that high, why not Tesla? Say what you want about Musk, but one thing’s for sure. He’s really good at getting people to loan him a lot of money to spend on fantastic ideas and then fall short on production targets, and then get around that problem by distracting investors with more down-to-Earth ideas like terraforming Mars.
Europe High on Miners
European Indexes are higher this morning, led by surging mining stocks which jumped 2.1% spurred by rising copper prices. The rising miners are mirroring what happened to the mining sector in the US yesterday. As gold (NYSEARCA:GLD) fell close to 1% testing the $1,300 level, though in a rare contrary move, mining indexes in both the majors and the juniors (NYSEARCA:GDX) (NYSEARCA:GDXJ) rose. Both are up in the premarket, as is gold itself, and silver. (NYSEARCA:SLV)
Fannie Mae Hints Housing Too Expensive Again
Fannie Mae (OTCMKTS:FNMA), which is still down 98% from pre-2008 housing market crash financial crisis levels, is prudently sounding the warning again this time, hoping that some will see at as prescient and wise. Fannie Mae CEO Timothy Mayopoulos told Fox Business that affordability might be more important than appreciating prices in real estate. This makes some sense, since the higher prices climb, the less affordable they become. Caught between the choice of saying that wages have to climb or housing prices have to drop, he chose the former, because falling housing prices may end up jeopardizing the remaining 2% of Fannie Mae’s market cap. He, rather expectedly, blamed the problem on faltering wage growth.
Amazon and Walmart in Indian Bidding War
Amazon.com Inc. (NASDAQ:AMZN) and Wal-Mart Stores, Inc. (NYSE:WMT) both want India’s popular online retailer Flipkart. Walmart offered first, and now Amazon is trying to snipe Walmart. Walmart wants half the company for about $12 billion, though no word on what Amazon’s counteroffer was. Based on bidding, it’s probably higher. Will Walmart make an even higher offer? If they want an online presence in India, then yes. Otherwise they will continue to feel threatened by the continuing encroachment of the Amazonians.