SONY - Wall Street Breakfast Podcast: Fed Holds Steady

2023-06-15 07:06:48 ET

Summary

• Federal Reserve holds interest rate steady in June, skipping a hike.
• Music publishers sue Twitter over alleged copyright infringement.
• TrueCar rallies after announcing major restructuring, CEO change.

Listen on the go! Subscribe to Wall Street Breakfast on Apple Podcasts and Spotify Federal Reserve holds interest rate steady in June, skipping a hike (00:28). Music publishers ( SONY ) ( WMG ) sue Twitter over alleged copyright infringement (02:57). TrueCar ( TRUE ) rallies after announcing major restructuring, CEO change (03:34).

This is an abridged transcript of the podcast.

As expected, the Federal Reserve opted for a pause but signals it’s not over just yet. Music publishers are suing Twitter for copyright infringement and TrueCar rallies after announcing major restructuring.

As widely expected, the Federal Reserve kept its policy rate unchanged at 5.0%-5.25% on Wednesday, breaking a streak of 10 straight rate hikes.

The pause gives the policymakers more time to assess the impacts of the 5 percentage points of hikes they already implemented.

Still, the Fed indicated that it may not be done with rate hikes.

Fed Chair Jerome Powell said that "nearly all policymakers" view that some further rate hikes will be appropriate this year.

It will monitor incoming data to see if inflation continues to recede in coming months.

We had a special edition of Wall Street Breakfast Wednesday afternoon.

It’s available the same place you downloaded this episode of the podcast.

Kim Khan spoke with Chaim Siegel, the investing group leader of Fed Trader on Seeking Alpha…

He talked about what the pause means for an overbought market, "bad news" and something he’s paying close attention to.

“So the fact that the market's overbought and you had quote, bad news with, oh, we expect more rate hikes, but the market's kind of not budging. It just means that, we're still in a bull market. This is very healthy. I would say that there is one thing I am worried about is the jobless claims. Last week it spiked. And all year, I've been -- when bears were worried about recession, I was just focused on that jobless claims number saying, it's been very strong. GDP is holding up. So I'm not sure what the bears are worried about.

And as long as the economy is holding up, and that's what he guided to, and maybe he had as a peak -- sneak peek at what the jobless claims report is going to be tomorrow, is my guess that maybe it came down from that spike, meaning it's a healthier economy versus last week – week’s report, and it's a volatile series, but it's important to me.”

That initial jobless claims number will be released today at 8:30am.

We also conducted a crypto roundtable , analyzing the impact of the fed’s rate pause decision on cryptos.

We spoke to eight analysts for their opinions on what this all means.

A handful of them, including Kennan Mell and Logan Kane , laid out a bull case for bitcoin ( BTC-USD ).

Other SA analysts advised to keep an eye on bitcoin ( BTC-USD ) and equities.

Mike Fay , Investing Group Leader of ‘BlockChain Reaction.’ said “If the rate pause turns out to be a ‘buy the rumor, sell the news’ event for stocks, we might see BTC and stocks re-correlate – just not in the way we might hope."

There’s a link to that article in show notes.

The National Music Publishers Association has filed a lawsuit against Twitter.

The suit claims that the social media platform violates the copyright of songwriters by using their music without permission.

A group of 17 music publishers, including Warner Music Group (NASDAQ: WMG ), Sony Music (NYSE: SONY ), and Universal Music Group ( OTCPK:UMGNF ), alleged copyright infringement on more than 1,700 songs.

The publishers are asking for $150,000 for every music work infringed, or more than $250 million in damages.

The lawsuit was filed in Federal District Court in Nashville.

TrueCar (NASDAQ: TRUE ) jumped in postmarket trading on Wednesday and is up nearly 10% premarket.

This after the auto retailer announced a strategic restructuring to streamline the organization.

The restructuring moves include a workforce reduction impacting approximately 102 positions, which amounts to about 24% of TrueCar's total headcount.

In the C-suite, TrueCar ( TRUE ) unveiled the appointment of a new President and Chief Executive Officer to succeed Michael Darrow, who is departing the company and vacating his position on the Board, Jantoon Reigersman.

TrueCar ( TRUE ) expects the restructuring to result in non-recurring cash payments of approximately $7M, primarily in Q2 and Q3 of this year. An annualized reduction in expenses exclusive of stock-based compensation of over $20M is also anticipated.

Other headlines to look out for on Seeking Alpha:

Cava shares price at $22 each, resulting in ~$318M proceeds (updated)

Berkshire Hathaway utility must pay punitive damages for 2020 fires, jury says

FedEx launches electric delivery vehicles in Canada through GM's BrightDrop

Estee Lauder rises as company teases anti-aging research

Unilever agrees to acquire Colorado-based frozen yogurt brand Yasso

FAA requires new planes to have second barrier to protect airline pilots

On our catalyst watch for the day, the May Retail Sales report will be released. Retail sales are forecast to rise 0.3% after stripping out autos and gas. Department store stocks, grocery store names and home improvement retailers Home Depot and Lowe's ( LOW ) have seen the most share price reactions to the details in the retail sales report over the last year.

U.S. stocks on Wednesday ended mixed after a choppy last two hours of trading.

The Nasdaq ( COMP.IND ) rose 0.4%. The S&P 500 ( SP500 ) added 0.08%. The Dow ( DJI ) retreated 0.7%.

Of the 11 S&P sectors, seven ended in the red.

Treasury yields had popped after the decision before losing steam. The 10-year yield ( US10Y ) was down 4 basis points to 3.80% while the 2-year yield ( US2Y ) was up 1 basis point to 4.71%.

Earlier on Wednesday, the producer price index ( PPI ) report for May came in, with the headline number falling more than expected on a M/M basis and trailing the consensus on a Y/Y basis.

Now let’s take a look at the markets as of 6:20 am. Ahead of the opening bell today, Dow, S&P and Nasdaq futures are in the red. The Dow is down 0.2%, the S&P 500 is down 0.3% and the Nasdaq is down 0.6%. Crude oil is up 1.2% at more than $69 a barrel. Bitcoin is down 4% at less than 25,000.

In the world markets, the FTSE 100 is up 0.2% and the DAX is down 0.5%.

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