MSFT - Wall Street Breakfast Podcast: May CPI On Tap

2023-06-13 06:49:12 ET

Summary

• The Federal Reserve will receive fresh CPI data, which is expected to show a slowdown in inflation growth.
• Alphabet is reportedly facing an €8 billion ($8.6 billion) EU antitrust penalty over its advertising business practices.
• The FTC has filed for a preliminary injunction to block Microsoft's acquisition of Activision, citing potential anti-competitive concerns.

Listen on the go! Subscribe to Wall Street Breakfast on Apple Podcasts and Spotify CPI will give Federal Reserve new data on fight against inflation. Alphabet ( GOOGL ) ( GOOG ) to be slapped with ‘massive’ EU antitrust penalty - report. FTC files for injunction to block Microsoft ( MSFT ) acquisition of Activision (ATVI).

This is an abridged transcript of the podcast.

CPI will provide the Federal Reserve with new data. Alphabet will reportedly be slapped with a massive EU antitrust penalty and the FTC files an injunction to block the Microsoft, Activision deal.

The Federal Reserve will get fresh data on day one of its two day monetary policy meeting.

Today’s consumer price index for May will be released premarket.

The headline CPI is expected to slow to a 0.2% M/M increase from its 0.4% advance in April. The projected progress looks even better on a Y/Y basis, with CPI growth expected to moderate to 4.1% from 4.9% growth in April.

Excluding food and energy, the core CPI is expected to rise by 0.4% M/M, unchanged from April's rate, showing just how sticky inflation is. On a Y/Y basis, core CPI is anticipated to rise 5.3%, down from 5.5% in April.

I spoke to Seeking Alphas Kim Khan about what will happen when CPI is released this morning.

“Well, the market will probably adjust on the CPI number. If it comes in hotter than expected, you'll see an immediate jump in treasury yields. You'll see an immediate drop in stock index's futures. And that the market will probably be braced for that. Then though they'll be kind of concerned and kind of positioning for whether, you know, Jay Powell will pull the rug out from under them.”

European Union authorities are set to charge Alphabet (NASDAQ: GOOGL ) with “massive new fines” over its advertising business.

According to Bloomberg, Alphabet is set to be hit with €8B ($8.6B) in penalties due to anti-competitive practices in its ad tech business model.

Per people familiar with the matter cited in the reporting, the landmark fine is meant to send a message and “target the core of the ad tech business model” after previous smaller fines levied against the company.

Bloomberg reports that the fine could be officially disclosed as early as Wednesday.

The Federal Trade Commission asked for a preliminary injunction in federal court to stop Microsoft from completing its planned $69 billion acquisition of Activision (NASDAQ: ATVI ). Activision ticked down 0.8% in regular trading on Monday.

The FTC said in its complaint that “Both a temporary restraining order and a preliminary injunction are necessary because Microsoft and Activision have represented that they may consummate the proposed acquisition at any time.”

The FTC is asking for the temporary restraining order to go into effect on Thursday before 9pm Pacific Time, according to the complaint. The suit was filed in federal court in San Francisco.

The deal has a termination deadline of July 18, where the parties can walk away, extend, or renegotiate the deal.

The FTC originally filed a lawsuit in December to the deal, though the suit was through an in-house administrative court proceeding that's scheduled to take place in August.

Other headlines to look out for on Seeking Alpha:

China mulls stimulus measures to boost economy, central bank cuts key policy rate

Apple cut to Neutral at UBS on softer iPhone and services growth in H2

Cineplex says QTD box office revenues at about 88% of same period pre-pandemic

U.S. federal budget deficit comes in wider than expected in May

Intel in talks to be anchor investor in chip designer Arm - report

Oracle rises to all-time high as cloud growth aids earnings beat

Chegg announces workforce reduction amid AI-driven strategy shift

On our catalyst watch for the day, Amazon ( AMZN ) will hold its two-day AWS re:Inforce conference. The speakers at the conference will cover AWS topics, AI and machine learning innovations, and security updates. Execs with CrowdStrike ( CRWD ), Datadog ( DDOG ), and Palo Alto Networks ( PANW ) will also participate. AMD ( AMD ) will hold an in-person and livestreamed event to showcase the company’s growth strategy and expanding product portfolio and capabilities for data center and AI.

Wall Street's major averages on Monday kicked off a big week on a positive note.

The Nasdaq ( COMP.IND ) advanced 1.5%. The S&P 500 ( SP500 ) ended up 0.9%. The Dow ( DJI ) added 0.6%.

Of the 11 S&P sectors, eight finished in positive territory, led by a more than 2% rise in Tech and a more than 1% rise each in Consumer Discretionary and Communication Services. Energy topped the losers.

Taking a look at the fixed-income markets, Treasury yields were slightly lower. The 10-year yield ( US10Y ) was down 2 basis points to 3.73% while the 2-year yield ( US2Y ) was down 3 basis points to 4.57%.

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 mixed. The Dow is down 0.01%, the S&P 500 is up 0.1% and the Nasdaq is up 0.4%. Crude oil is up 1.7% at more than $68 a barrel. Bitcoin is up 0.6%.

In the world markets, the FTSE 100 is up 0.01% and the DAX is up 0.1%.

On today’s economic calendar, the FOMC meeting begins today and CPI will be released at 8:30am.

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