The Rundown - Cool Inflation Data Sends Stocks to Record High, EU Slap Chinese EVs with 48% Tariffs

Episode Date: June 12, 2024

Stock market update for June 12, 2024.

Public.com presents the rundown, your daily market update in five minutes. My name is Zadmani, and today is Wednesday, June 12th. In today's episode, we tell you about the trade tensions between the EU and China, and why not everyone in the EU is happy with the new tariffs. Also, GameStop stock was soaring after announcing a fresh round of cash, and then stick around to the end of the show to learn why Joey Chestnut is banned from competing in the 4th of July hot dog eating contest. All right, let's go.

Well, guys, we just got back to back record closes in the stock market. The S&P and NASDAQ both moved higher on Tuesday and closed at record highs. And the rally in the S&P yesterday was mostly driven by a small number of companies. Just 182 of the 500 companies in the S&P were up on Tuesday, one of which was Apple. Apple had a monster day on Tuesday, up more than 7% adding 200 billion plus to their market cap and making all-time highs in the process. I think it took a minute, but investors realized that Apple's AI announcements from Monday, they were pretty good. This big move from Apple yesterday puts them very close to overtaking Microsoft as the most valuable company in the world. They're about $40 billion away.

So what a turn of events for Apple. They went from being overtaken by Nvidia to be a second largest company in the world to now rocketing up and almost retaking the top spot. I mean, don't be surprised if that happens sometime this week. Breaking news, we just got the latest inflation numbers, the May CPI report. just dropped, and it came in flat, surprisingly. CPI in May was up 3.3% from a year ago, which is actually lowered than the 3.4% that economists were expecting. And it's the same as it was last month.

The biggest driver of inflation continues to be housing, which was up 5.4% from a year ago. So we're finally starting to see a few more data points that inflation is headed back in the right direction. Unfortunately, it's still higher than the 2% that the Fed is targeting. But we're going to learn more about what the Fed has to say about this today, because Jerome Powell is speaking at 2.30 p.m. Eastern, as the FOMC meeting wraps up.

We'll recap Jerome Powell's comments in tomorrow's episode of The Rundown, so make sure you guys tune in. Let's run through some headlines. Starting with the EU and China, the European Union is hitting imported Chinese electric vehicles with fresh tariffs of up to 48%. Now, there was already a 10% tariff in place, but carmakers were told this morning

that additional rates of between 17% and 38% will be applied. This move is designed to slow down the influx of cheap, cheaper EVs from Chinese companies. China doubled its share of the EV market in the EU last year to 8% with about 10 billion euros of EVs exported to the EU. The EU is hoping that these tariffs will help slow that down. Now, the European automakers have had a mixed reaction in response to these tariffs. Like, German companies sell a lot of cars in China. So stocks like Volkswagen and BMW slid due to fears that China could retaliate with their own tariffs on German cars. And that's why Germany, along with Sweden and Hungary, have said it,

doesn't approve of the move to hit China with these heavy tariffs. But on the other hand, shares of France's Renault have turned positive because they don't have a significant exposure to the Chinese auto market. And Tesla might also not be off the hook here. The European commissioners said that Tesla might receive an individually calculated duty rate on its cars manufactured in China. Because remember, Tesla has a big factory in Shanghai. So we'll see how this plays out and if China decides to retaliate against European automakers. By the way, if you think a 50% tariff is harsh, just remember the U.S. is now hitting China with the United States. with a 100% tariff on their EVs.

Let's shift gears and talk about GameStop. They're back in the news after announcing that they raised over $2.1 billion after selling 75 million shares. Company wanted to make sure it didn't let a good meme stock rally go to waste and were able to raise a lot of cash in the process. The video game retailer says it plans to use the proceeds for general corporate purposes, which include acquisitions and investments. GameStop stock actually jumped more than 20% on this news yesterday.

Roaring Kitty's got to be feeling pretty good about that. I mean, the dude has over $200 million invested in this company. Oh, on top of that news, high profile short-seller Citrion tweeted this morning that it was no longer shorting GameStop because I quote, with $5 billion in the bank, they have enough runway to appease their cult-like following. That's what Citrion tweeted this morning. But research firm Wedbush lowered their price target for GameStop to $11 a share from $13.50 due to lower than expected proceeds from the offering. I guess they expected GameStop to raise even more money. Overall, I see that GameStop's management has played this pretty well. They've raised a ton of money and the stock is up.

So, yeah, we'll see what they end up doing with all that cash. I still don't know how you revive like a video game retailer because most people are like buying video games digitally, right? So still not sure what you do about that. Let's talk about some stocks making moves today. Starting with Oracle. Shares of the OG Tech Giant are up this morning. Despite the company missing on their earnings report,

Oracle's revenues grew by 3% to $14.3 billion. And profits actually dropped more than 5% to $3.1 billion. Both of these numbers missed Wall Street estimates. But the reason the stock is up this morning is that Oracle issued upbeat guidance during their earnings. And yes, they used the word AI as well. Oracle expects business to grow through the fiscal year 2025 because of strong AI demands, pointing to the more than 30 artificial intelligence sales contracts they've signed last quarter. So that is music to investors' ears.

AI and growing revenue? I mean, what else could you want? The stock is trading up more than 8% in the pre-market. Stock not doing so great this morning is Paramount. Shares of Paramount are dropping after reports the majority owner of the company Sherry Redstone has called off a possible merger deal with Skydance Media. I can't believe we're still talking about this. These two companies have been talking for months now.

There was hopes that Skydance was going to announce the merger with Paramount this week. But I guess talks have officially fell apart and Paramount is now going to move on and try to find another buyer. Obviously, investors did not like that news. shares of the media company are down about 2% in the pre-market today following a 7% drop yesterday after this news broke. Let's wrap the show with a fun fact. Today's fun fact is about one of America's greatest athletes. Joey Chestnut, the greatest eater of all time, has been banned from the 4th of July hot dog eating contest. Now, this all is happening due to a contract dispute. Previously, Joey Chestnut was offered $1.2 million on a four-year deal with Major League

Eating. Joey lost the deal for supposedly choosing brand partner impossible. foods that sells vegan alternative hot dogs. Now this yearly 4th of July hot dog eating contest is put on by Nathan's, which funny enough is a publicly traded company and they're concerned about their growth moving forward. Currently about 5.8 billion hot dogs are consumed each year, which is about 17 dogs per person according to CNBC. But hot dog companies are concerned that there's going to be more consumers that choose to be health conscious and end up going with more healthy decisions than eating a hot dog. So yeah, there's going to be some beef if someone tries to roll up at Nathan's pushing some sort of vegan product. But this is a travesty, man. Joey Chestnut is a 16-time Nathan's hot dog eating

contest champion. By the way, Joey Chestnut's best performance is eating 76 total hot dogs, along with the buns, in 10 minutes. That is insane. Well, all right, guys, that's the rundown for today. Hope you guys enjoyed today's episode. A lot of different topics covered in today's show. If you guys did, please consider giving us a five-star rating on Apple and Spotify. And don't forget to vote in today's Spotify poll as well. The engagement really does help the show. Thank you guys so much for listening. Shout out to Connor and Mike for all the help behind the scenes. And we'll see you guys back here tomorrow. This is the rundown, your real-time resource for news events and trends in the markets.

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