Hello everyone, today we're going to talk about what's been happening on Wall Street lately. There's a lot of information, so buckle up!
Goldman Sachs traders recently issued a warning that Wall Street is experiencing one of the most astonishing short squeezes in recent years, and this drama may continue for weeks to come! This is not a joke, so let's take a serious look.
Goldman Sachs data shows that their index of the most shorted stocks has surged 42% from its April low! It has risen 16% in the past month alone, and in the last 5 trading days, it has soared like a rocket, rising 10.8%. More exaggeratedly, systematic funds have bought about $30 billion worth of US stocks in the past month, which clearly indicates huge pressure for short covering!
Astonishing Short Squeeze, Three Key Nodes to Watch
The scale of this short squeeze is indeed astonishing, but what's more noteworthy is that the overall short selling in the market has reached an extreme level. Data shows that the median short interest of S&P white index components is approaching a 6-year high! This is like a pile of dry wood, and a single spark could trigger a larger short squeeze.
So, to what extent will this fire burn? Goldman Sachs believes there are three key nodes worth watching closely:
- This week's CPI data: Inflation data directly affects the Federal Reserve's monetary policy, which in turn affects market sentiment.
- Ongoing trade negotiations: The direction of trade relations has a significant impact on market risk appetite.
- News from the Senate on Trump's tax reform bill: Changes in tax reform policies will directly affect corporate earnings expectations.
Goldman Sachs' Investment Advice: Focus on the Russell 2000 Index
For investors who want to position themselves ahead of the next rally, Goldman Sachs has given a clear direction - the Russell 2000 Index! They specifically reminded investors to pay attention to the short squeeze opportunities in low-quality stocks, as small-cap stocks are likely to be the next breakout point.
However, everyone should also be careful, as the total leverage level of hedge funds has climbed to a historical high of 99%, indicating that the market's risk appetite has fully returned. In May, US stocks had their best performance in 35 years, and hedge funds' investment strategies have shifted from cautious to fanatical. The sustainability behind this shift in sentiment is worth pondering.
Positive Signals from US-China Negotiations, India Joins the Fray
Let's take a look at the latest news. The US and China continue to negotiate, and results may come as early as tomorrow morning. Although China has been relatively low-key, the United States has begun to release positive signals to the outside world. The US Treasury Secretary said the talks were good, the US Commerce Secretary said they were fruitful, and Trump even posted that he was getting all good news!
The market generally believes that the probability of reaching an agreement in this negotiation is high. On the one hand, Trump needs progress in the trade war; on the other hand, he also needs rare earths. And Beijing does not want to further escalate the conflict with the United States, after all, the longer the time drags on, the more beneficial it is for Beijing. Therefore, the final result is likely to be positive, and the possibility of accidents is relatively small.
In addition, sources say that India and the United States will also reach an interim trade agreement before the end of the month. Currently, the focus of the negotiations between the two sides is on market access for industrial and some agricultural products, tariff reductions, and non-tariff barriers. Their goal is to sign the first part of a bilateral trade agreement by September or October.
However, India has rejected the US request to open its wheat, dairy, and corn import markets, but the US has also stated that 10% is the bottom line and there is no room for discussion. It seems that these negotiations are not going smoothly.
Tariff Policies Face Challenges, Trump Administration Remains Firm
Judicially, the Federal Circuit Court of Appeals is about to make a key decision. The US government has initiated a legal notice requesting an extension of the suspension of the invalid tariff negotiations, in order to continue to maintain most of Trump's global tariff policies during the litigation period.
The key here is whether Trump can continue to maintain his global tariff policies during the litigation period. If the appellate court makes a ruling unfavorable to itself, the Trump administration said it will file a lawsuit with the US Supreme Court. In addition, the Trump administration also said that, according to presidential power, it can theoretically re-impose taxes based on other laws and regulations.
Currently, multiple other cases challenging Trump's tariffs have been suspended pending the Federal Circuit Court's ruling.
Apple WWDC Lacks Highlights? Stock Performance at the Bottom
Having talked about macro trends, let's take a look at individual stocks. On June 10, Apple's 2025 Worldwide Developers Conference opened. The biggest highlight of this conference was the update in operating systems, with the launch of a new design language called Liquid Glass, reshaping the visual effects and experience of Apple's entire ecosystem. At the same time, Apple has also significantly changed the naming method of full-platform operating system versions, no longer using traditional version numbers, but using year names.
Apple is also preparing for the release of its first original film "F1," but these updates are considered secondary, and the outside world is more concerned about Apple's AI strategy. Apple has launched a multi-effect Apple Intelligence feature, including broader language support, deep integration with ChatGPT, real-time translation, etc.
However, although artificial intelligence technology runs throughout the entire conference, the key Siri upgrade did not arrive as expected. Apple said that to meet their standards, it will take more time.
Overall, the many promises of this conference in terms of AI seem quite restrained. Compared with other tech giants, Apple's progress in the AI field is considered too slow.
Morgan Stanley released its latest research report, believing that Apple's update lacks significant AI breakthroughs, indicating that Apple's progress in the AI field may be slower than expected. Although Apple has launched the Apple Intelligence feature, the AI function upgrade is limited, a more personalized Siri still needs to wait, and only 20% of iPhones currently support the new AI features.
In addition, this conference continued to announce new Gemini partnerships, also to obtain Apple Intelligence approval in China. But Morgan Stanley said that the potential Google Gemini cooperation seems to be hindered by the Google Department of Justice case.
Recently, Apple also lost a lawsuit. The US Supreme Court refused to suspend the App Store rectification order, rejecting Apple's request to suspend the implementation of the App Store rectification order. This means that Apple may have to allow App Store developers to guide users to purchase in-app goods online without paying commissions.
| Item | Value |
|---|---|
| Service Revenue Growth | 12% |
| Service Revenue | $96 Billion |
| App Store Revenue | Over $27 Billion |
| App Store Profit Margin | 70%-80% |
| Overall Profit Margin | 32% |
These factors combined may have a huge impact on Apple's financial situation.
So far this year, Apple's stock price has fallen by about 20%, ranking at the bottom among the Magnificent Seven tech stocks in the US.
How Do Institutions View Apple? Long-Term Potential and Short-Term Challenges Coexist
Runyun said that without the addition of artificial intelligence, only 17% of respondents worldwide said they expect to buy an iPhone in the next 12 months, the lowest level in 10 years.
Analysts at Ryder Bogle said that long-term potential and short-term challenges coexist, with huge short-term resistance, but in the long run, Apple is about to begin a period of artificial intelligence monetization. The institution estimates that 25% of the world's population will eventually be exposed to artificial intelligence through Apple devices in the next few years.
Morgan Stanley still maintains Apple's overweight rating and a target price of $235, believing that Apple still has the key elements to win in the AI era with its strong ecosystem, user base, and privacy standards.
Trump's "Universal Stock Ownership" Plan: Give Every Newborn $1,000
Finally, let's talk about Trump's proposed US Universal Stock Ownership Plan.
Trump announced at a roundtable meeting with CEOs of Dell, Goldman Sachs, and Uber, among others, that an important part of the Republican Universal Domestic Policy Act is to provide every American newborn with a $1,000 investment account, invested in an index fund tracking the US stock market. Trump called this one of the most important components of his second term.
Specifically, the Trump Savings Account is part of the Big, Beautiful Bill that Trump passed in the House of Representatives last month. The proposal requires the Treasury Department to provide a $1,000 investment account for children born in the United States between January 1, 2025, and January 1, 2029. Newborns will be automatically enrolled in the plan, and parents or other account custodians can deposit up to an additional $5,000 in after-tax funds into these accounts each year.
A White House official confirmed that a group of large companies' CEOs simultaneously announced that they will jointly invest billions of dollars to establish Trump Savings Accounts for their employees' children.
| Item | Value |
|---|---|
| Number of Newborns | 3.5 Million/Year |
| Initial Investment per Person | $1,000 |
| Maximum Annual Investment | $5,000 |
Some say that this move can both encourage more births and bring additional liquidity support to US stocks, and individuals are also expected to obtain long-term investment returns. This is a brilliant move that benefits all three parties!
Okay, that's all for today's content. Hope this information is helpful to everyone. Remember, the stock market is risky, and investment needs to be cautious! Thank you for watching, and we'll see you in the next issue!