Hello everyone, today we're going to talk about the major events happening in the U.S. stock market and internationally. The stock market has been a bit volatile these past few days, Trump is back to "making pronouncements," and tech mogul Huang Renxun (Jensen Huang) of Nvidia has new moves. It's a lot of information, so let's dive in!
Speaking of which, the overall market performance today was mediocre, with a slight pullback. The S&P 500 fell by 0.27%, and the Nasdaq also dropped by 0.5%. But don't worry too much, these are normal fluctuations. After all, the stock market can't go up every day; it's normal to take a breather occasionally. Especially around the 6,000 point mark, the bulls and bears will definitely fight back and forth. Even if it falls back below 6,000 points, don't be surprised. Only by solidly breaking through the heavily traded area between 6,000 and 6,147 points can the S&P enter a new phase. The same goes for the Nasdaq; there will definitely be fluctuations before the 20,000-point mark, and there may even be a sudden large negative candle. The risk of speculation at this position is quite high, with potential for both upside and downside. However, considering the overall upward trend of U.S. stocks, it's still possible to continue to be bullish after breaking through the resistance zone.
China-U.S. Negotiations: A "Rashomon" Effect? Rare Earths Become Key!
Recently, the second round of China-U.S. negotiations concluded in London, and the results are somewhat confusing. Trump excitedly stated on his social media that a U.S.-China agreement has been reached and is just waiting for him and another leader to sign! He said that China will supply rare earths in advance, the U.S. will relax student visas, and that the U.S. will collect 55% tariffs while China collects 10%, with the two sides having a very good relationship, making it seem like "America won big."
However, a report from Singapore's Lianhe Zaobao stated that the two sides only reached a framework in principle on implementing the consensus reached during the phone call between the two heads of state and the Geneva talks, and will report to their respective leaders. If the two countries reach a framework, the 90-day truce period may be extended, but long-term China-U.S. relations will be difficult to improve. The U.S. Secretary of Commerce also came out to say that the U.S. tariffs on China will not change from their current levels, and the 55% figure is not a new number, including the existing 30% comprehensive tariff on China, plus a 25% tariff on specific products.
China's Vice Minister of Commerce also stated that the two sides reached a framework in principle on implementing the consensus reached during the phone call between the two heads of state on June 5th and the Geneva consensus.
Here, rare earths have become key. China has more than 70% of the world's rare earth supply capacity. This stuff is an important raw material for industrial production, and electronic products, military products, and electric vehicles all rely on it. Although many countries around the world have rare earth reserves, China has a complete industrial chain for rare earth development and purification, and its tolerance for environmental pollution is relatively high, so it controls most of the supply.
After the negotiations, a large Chinese rare earth permanent magnet factory obtained an export license to the United States, which shows that the advance supply of rare earths to the United States mentioned in the negotiation results is not unfounded. Some industry insiders analyzed that China may have quietly gained the upper hand in the negotiations because its dominant position in the global rare earth industrial chain is also a way to put the squeeze on the United States.
China has been playing the rare earth card in its foreign relations for a while now. As early as 2010, during the dispute with Japan over the Diaoyu Islands, it banned the export of rare earths to Japan. It is not easy to get rid of dependence on Chinese rare earths. It requires a complete industrial chain, and the refining process involves a lot of acid pollution, radioactive contamination, etc., which are costly economically and socially. In the future, international demand for rare earth permanent magnets will continue to grow, and new products, including humanoid robots, will rely on rare earths.
But if China used rare earths to exchange for student visas, as Trump said, it would be incredible. It's like the other party played a single card, and you played a royal flush? No wonder the capital market hasn't made any big moves; everyone doesn't completely believe it.
Inflation Data Shrouded in Mist: How Much Do Tariffs Affect?
After talking about the international situation, let's take a look at the U.S. domestic economic data. The U.S. recently released its May CPI data, which is an important indicator of inflation. The overall CPI for May rose 0.1% month-on-month, lower than the 0.2% in April and lower than economists' expectations. On an annualized basis, the May CPI rose 2.4%. If food and energy are removed, the core CPI rose 0.1% and 2.8% year-on-year.
It should be noted that the May data was obtained after basic tariffs had already been implemented, and the inflation data was still able to remain at a low level, which made many people doubt the claim that "tariffs increase inflation."
| CPI Indicator | May Data (Month-on-Month) | May Data (Year-on-Year) |
|---|---|---|
| Overall CPI | 0.1% | 2.4% |
| Core CPI (Excluding Food and Energy) | 0.1% | 2.8% |
Some people believe that the impact of tariffs on inflation is one-time and will not cause sustained inflation. The May data shows that tariffs do not seem to have much impact on inflation. However, some large banks believe that the impact has not yet begun. Goldman Sachs analysts believe that the impact of tariffs will be reflected in the coming months, with the core CPI rising 0.35% month-on-month.
However, I believe that inflation data does not depend entirely on tariffs. Housing prices and service prices, which account for a large weight, are not much affected by tariffs. In the trade war, commodity prices fell, especially energy prices, and the drop in commodity prices and the imposition of tariffs offset each other. That's why Trump said on his social media that there is no inflation, and interest rates should be cut!
Musk "Admits Defeat"? Tesla Robotaxi is Coming!
Another interesting thing in the tech world is that after Musk and Trump attacked each other on social platforms, both sides have calmed down this week. Musk couldn't sleep in the middle of the night and posted an apology, saying that he regretted scolding Trump, and deleted the previous posts scolding Trump.
In addition, Musk also released a Robotaxi post, but it was postponed by 10 days from the expected June 12th release. Musk said that the robot taxi will be launched in Austin on June 22nd, and the company is very cautious about safety issues, so the date may change.
Robotaxi is of great significance to Tesla. The ultimate goal of its autonomous driving level is Level 5 fully autonomous driving, or at least Level 4 standards. Initially, a dozen vehicles will be deployed, and the scale will be expanded in the future. The initial small-scale operation will be limited to a certain area and will be remotely monitored.
Although Tesla's stock price fell slightly today, it should be a normal technical adjustment. My main concern is that the second-quarter delivery data next month may not be ideal. Because of the benefit of the Robotaxi launch in June, the opportunity may be greater than the risk. However, when the delivery data is about to be released, even if expectations are not good to begin with, the actual realization of bad data will still have a certain impact on the stock price.
Even if the fluctuations in June and July pass, Tesla still has long-term investment value. The large-scale commercial use of Robotaxi will increase multiple sources of income and themes, including the number of active users of the ride-hailing software. When the market starts to pay attention to the number of active users of the ride-hailing software, we will know that this thing is very interesting. Adding one more user to the software will not add much cost. Companies like Netflix, Twitter, Reddit, Disney, and even Alibaba and JD.com have all used the growth in the number of active users as a reason for stock price increases. The growth in taxi revenue will also become a highlight of income and profit growth in the coming years. In short, Tesla has its own popularity, and people pay a lot of attention to it. If you add some data that can be hyped up, it will be easier to drive up the stock price.
Defense Budget Adjusted? Lockheed Martin Encounters Negative News!
After talking about technology, let's take a look at the military industry. The U.S. Department of Defense cut Lockheed Martin's order for F35 fighter jets from 48 last year by half, to 24. An F35 fighter jet costs more than 100 million, so this is a decrease of more than 2 billion in revenue.
Fighter jets are expensive and have pilots, which is costly, but they are powerful. The Department of Defense will continue to purchase them for many years to come, but drones have more advantages, which may be one of the reasons why the F35 fighter jet order was reduced even as the defense budget increased.
Lockheed Martin suddenly encountered negative news and fell, but the stock price is still rebounding quite a bit on the support line, closing with a lower shadow line, so continue to hold it and wait for it to break even.
Huang Renxun Eyes Quantum Computing!
Finally, let's talk about a new hotspot in the tech world. Huang Renxun said that quantum computing is reaching a turning point and will be powerful enough in the next few years to help the world solve some ordered problems.
Quantum computing is potentially many times more powerful than traditional computers, and tech giants have been researching it for many years. If one day a company achieves a slight breakthrough in quantum bit stability, it may be a major technological change.
Huang Renxun said, just like Moore's Law, I can completely foresee that every 5 years, the number of logical bit quanta can increase by 10 times, and every 10 years it can increase by 100 times. Nvidia's chips will now also be used to support quantum computing, and quantum computers have the potential to significantly accelerate the speed of large language models.
I found that Huang Renxun can catch every cutting-edge technology hotspot. For example, a few years ago, the metaverse was popular, and Nvidia worked on the metaverse. When mining was popular, Nvidia worked on mining. When AI became popular, Nvidia dominated the world of artificial intelligence chips again. Now that the concept of quantum computing is becoming popular, Huang Renxun, who originally did not favor quantum computing, has completely changed his attitude recently.
There are actually two types of quantum computing concept stocks. One type is tech giants that are researching quantum projects, hoping to overcome technical problems one day. The other type is startups, with a market capitalization of only a few billion, which have skyrocketed and plummeted this year, becoming a hotspot for capital speculation. My preference is still for those large companies, such as Google, IBM, and Nvidia, as their investment style will be much more stable.
Okay, that's all for today's discussion. There's a lot of information, and I hope it's helpful to everyone! Remember, the stock market is risky, and invest with caution!