China Fund News reporter Guo Minjun
Good morning, everyone! There was a lot of great things going on last night and this morning.
All three major U.S. stock indexes hit record highs; Tesla strives for Musk's salary of more than 400 billion yuan.
US CPI in April remained significantly higher than policy target; The U.S. housing index came in lower than expected.
Fed officials are "hawkish" again; Morgan Stanley issued a research report saying: "Don't expect interest rate cuts this summer. ”
U.S. Treasury yields closed lower across the board.
All three major U.S. stock indexes hit record highs
On May 15, local time, the three major U.S. stock indexes closed up across the board. At the close, the Dow rose 0.88% to 39,908 points. The S&P 500 rose 1.17% to 5,308.15. The Nasdaq rose 1.40% to 16,742.39. All three major stock indexes hit record highs.
SAFTSE rose 3.89% and Amgen rose 2.45%, leading the Dow.
The Wind U.S. TAMAMA Technology Index rose 1.43%, and most of the seven tech stocks rose, with Nvidia up 3.58% and Tesla down 2.01%.
Bridgewater Associates bought six of the Big Seven in technology stocks in the first quarter of 2024 and bet $800 million on Google's parent company, Alphabet, except for the struggling electric car maker Tesla, according to securities filings.
Chip stocks performed strongly, Chaowei Semiconductor rose 4.24%, Broadcom rose 4.07%, Applied Materials rose 3.69%, Nvidia rose 3.58%, Qualcomm rose 3.03%, ASML rose 2.44%, TSMC rose 2.36%, Microchip Technology rose 1.6%, and Intel rose 0.74%.
Tesla strives for Musk's salary of more than 400 billion yuan
On May 15, Eastern time, Tesla closed at $173.99, down 2.01%.
Tesla is looking to attract its unusually large retail investor base to ensure that CEO Elon Musk's $56 billion (404.5 billion yuan) compensation package can be approved by shareholders.
To help lead the effort, Tesla's board has hired a strategic adviser, according to people familiar with the matter. To support this activity, the consultant is working with an external law firm.
Tesla's annual shareholder meeting will be held on June 13, when investors will vote on whether to maintain Musk's 2018 compensation package. According to the equity incentive plan approved by Tesla's board of directors at the time, Musk can currently receive up to $56 billion in compensation.
Three months ago, a Delaware judge rejected the plan, arguing that Tesla's directors had failed to consider the best interests of investors. Last month, Tesla asked shareholders to re-vote on the compensation package at its annual shareholder meeting, as the company addressed some of the judges' concerns.
This vote could have a significant impact on Musk's future leadership of Tesla. Musk has threatened to develop products outside of Tesla if he doesn't get at least a 25% stake in Tesla, which is a key part of the scrapped compensation package.
If the compensation package is approved, Musk will have enough options to nearly double his current stake in Tesla to about 21%.
Musk posted on X that the subscription rate of Tesla's FSD software among American car owners is much higher than 2%. The day before, it was reported that data from credit card data provider Yipit showed that only 2% of U.S. car owners who received a one-month free trial of FSD chose to subscribe to the service after the trial period ended.
Musk's artificial intelligence startup xAI has been in talks with Oracle executives to rent cloud servers from Oracle for $10 billion in the next few years, according to people familiar with the matter. The deal will make XAI one of Oracle's largest customers.
At the same time, Tesla will lay off another 601 employees in California, and this round of layoffs will officially take effect on June 20.
The US CPI remained significantly above the policy target in April
On May 15, local time, the U.S. Department of Labor released the latest data, and the consumer price index (CPI) rose by 3.4% year-on-year in April, in line with market expectations, and the previous value was 3.5%. The indicator soared to a 40-year high of 9% in June last year; On a month-on-month basis, the CPI rose 0.3% month-on-month in April, with both the expected and previous values of 0.4%.
After excluding volatile food and energy prices, the core CPI rose by 3.6% year-on-year in April, down 0.2 percentage points from the previous value of 3.8%, but still significantly higher than the policy target of 2%, with an expected value of 3.6%; The indicator rose 0.3% month-on-month, also in line with expectations, compared to 0.4% previously.
The U.S. housing index came in lower than expected
The NAHB housing market index in the United States came in at 45 in May, lower than the expected 51 and the previous reading of 51.
U.S. business inventories fell 0.1% month-on-month in March, with an expected decline of 0.1%, and the previous value was revised to an increase of 0.3% from a 0.4% increase.
The New York Fed survey showed that factory activity in New York State fell more sharply in May, shattering expectations of a slight improvement. New orders continue to fall sharply, indicating that demand remains weak in the state. In contrast, there has been a big improvement in shipments. The outlook for the future has also become bleaker, according to the survey. The overall outlook index for the coming months has declined, as have business expectations for orders and shipments.
Fed officials are "hawkish" again
On May 15, local time, Federal Reserve official Kashkari said that the biggest question now is how restrictive the current policy is. Interest rates may need to be kept at current levels for a while longer to clarify where inflation is headed. The Fed's balance sheet reduction is progressing well. The Federal Reserve is committed to meeting its 2% inflation target.
Fed official Schmid said there were signs that inflation was slowing; The overall economy remains strong; Interest rates are likely to remain high for some time; The theme of this year's Jackson Hole summit will be the transmission of monetary policy.
According to the CME Fed Watch on May 16, the probability that the Fed will keep interest rates unchanged in June is 91.5%, and the probability of a 25 basis point rate cut is 8.5%. There is a 66.0% probability that the Fed will keep interest rates unchanged until August, a 31.6% probability of a cumulative 25 basis point rate cut, and a 2.4% probability of a cumulative 50 basis point rate cut.
Nick Timiraos, the New Fed News Agency, wrote that price pressures eased in April, which should make it easier for Fed officials to keep policy unchanged at next month's meeting. With two more reports likely to be needed to shore up officials' confidence that inflation can return to the lower levels prevailing before the pandemic, the Fed may not be prepared to cut rates before September.
Morgan Stanley: Don't expect a rate cut this summer
In the early morning of May 16, Morgan Stanley released a research report saying: "Don't expect interest rate cuts this summer. ”
Morgan Stanley expects that the Fed is likely to start cutting interest rates in September. Higher-than-expected inflation in the first quarter of 2024 made the Fed more cautious and pushed Morgan Stanley's expected rate cut to September from July. It is believed that inflation will slow down in the second half of the year, giving the Fed the confidence to start cutting interest rates.
U.S. Treasury yields closed lower across the board
On May 15, local time, U.S. Treasury yields closed down across the board. According to Wind Information, the yield on the 2-year Treasury note fell 8.7 basis points to 4.736%; The yield on the 3-year Treasury note fell 10.4 basis points to 4.513%; The yield on the 5-year Treasury note fell 10.8 basis points to 4.353%; The yield on the 10-year Treasury note fell 9.4 basis points to 4.349%; The yield on the 30-year Treasury note fell 8.4 basis points to 4.505%.
Editor: Huang Mei
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