Here's what the Fed will do about interest rates

Plus: The Apple=Broadcom deal is a massive one - here's why [Image]( Friday, June 2, 2023 [$1Billion Buyout Would Unleash a 10X Moonshot for Ground Floor Investors]( This company and its founders are in talks with some of the world’s biggest organizations about a series of potential contracts. A single contract from any one of these mega-cap giants could send this company’s mere $100 million valuation soaring, transforming it into a billion-dollar unicorn overnight. [Check out the full exposé here.]( Dow Jones | 33,061 | +0.47% S&P 500 | 4,221 | +0.99% Nasdaq | 13,100 | +1.28%   MARKET MINUTE   AI Gets a Boost, Fed Pause and Weak Retail Sales Good morning everyone. Alex Kagin, Director of Research at Money Morning here. The Biden-McCarthy debt ceiling deal passed the Senate late last night and will move onto the President's desk, preventing what might have been a U.S. debt default. After a brief slowdown in the unstoppable, artificial intelligence-fueled advance of big tech, the sector is back in full force. Nvidia Corp. (NVDA) climbed roughly 5% on the back of Microsoft Corp. (MSFT) signing a deal for A.I. computing power with Nvidia-backed Core Weave that could be worth billions and Meta Platforms Inc. (FB) was up 3% with the announcement of its new VR headset. Markets also considered the fact that the Institute for Supply Management’s (ISM) prices paid component fell sharply – down 9 points to 44.2. No matter how bullish investors might be about the potential for artificial intelligence, they should be prepared to weather corrections along the way. Fed Weighs Pause on Weak Manufacturing Data Aside from the AI theme, traders also geared up for the monthly jobs report, with forecasters projecting a moderation in the pace of hiring that could potentially allow the Fed to pause its tightening policy in June. Like every day this week, we got to hear from another Fed governor. Fed Bank of Philadelphia President Patrick Harker said “we should at least skip this meeting in terms of an increase. In an essay Thursday, his St. Louis counterpart James Bullard, says he believes interest rates are at the low end of what’s likely to be "sufficiently restrictive" to bring down inflation. May’s ISM and S&P global manufacturing reports shows companies continue to reduce inventories and backlogs as the new order index remained in contraction territory. This is one more data point that could push Fed Governors to vote for a pause in interest rate hikes. Retail Stocks Retail had a tough day Thursday as consumers get squeezed. This week’s batch of retail and consumer goods earnings suggests the premium and mid-market consumer are also getting squeezed. Victoria’s Secret & Co. (VSCO) plummeted 9% after its first quarter earnings missed. The apparel company cut its outlook, citing competition from cheaper products and sales weakness in North America versus international markets. Macy’s Inc. (M) also lowered its sales outlook to as consumers “reallocated spend to food, essentials, and services.” Earlier in the week we also saw Michael Kors owner Capri Holdings Ltd (CPRI) take a hit. The CEO said US sales are likely to remain soft throughout the summer. This now puts the stock roughly 50% off its February highs. Calvin Klein parent PVH Corp. (PVH) joined the party as well with a big guidance miss, sending the stock down almost 10% Discount retailers are also under pressure. Dollar General Corp. (DG) took a 20% haircut after reducing its profit guidance, warning that earnings will fall and that the macroeconomic environment is more challenging than anticipated. This is only a week after Dollar Tree slashed its outlook as well. While there are signs of consumer strength, The SPDR S&P Retail ETF (XRT) is down 5% this year compared to the S&P 500, which is up roughly 10%.     Top Profit Opportunities   [Here’s What to Do When the Stock Market’s A.I. Hype Fades Out]( — By Shah Gilani, Chief Investment Strategist Most of the questions I’ve gotten this week center around computer chips and semiconductor companies, and with good reason. Of course, Nvidia Corporation (NVDA) is still leading a rally driven by the buzz around artificial intelligence, and everyone wants to know how to get in on the trend. But there’s a problem anytime that you see these kinds of pops and huge gaps forming in stocks from any sector, which is that inevitably, the hype dies down and those gaps get filled as investors take profits. When that happens, those stocks leading the trend come back down to earth. [This isn't going to be any different...](   [Apple-Broadcom Deal Sets the Stage for U.S. Tech Resurgence and Investment Opportunities]( — By Alex Kagin, Director of Research Apple Inc.'s (APPL) new multiyear agreement with Broadcom Inc. (AVGO) marks a significant milestone in the resurgence of the U.S. semiconductor industry and a lucrative new opportunity for tech investors. The Apple-Broadcom deal reflects a growing trend of U.S. tech companies bringing their manufacturing operations back to the United States as part of a government-led effort to secure America's tech supply chain. Semiconductors are critical to all consumer technology, including smartphones, computers, TVs, and gaming consoles. These tiny microchips power everything modern tech offers, including software, the internet, touch screens, voice recognition, and more. In 2022, Congress passed the CHIPS Act (Creating Helpful Incentives to Produce Semiconductors), allocating over $50 billion in funding to revitalize the U.S. semiconductor industry. At its peak in the 1990s, the U.S. controlled more than 40% of all semiconductor manufacturing worldwide. Despite its majority market share, that figure today is only 12% due to companies like Apple outsourcing their manufacturing overseas to countries like Taiwan and South Korea. Semiconductors play a pivotal role in powering modern consumer technology, and with the rapidly growing demand driven by artificial intelligence, the U.S. is poised to revitalize its tech manufacturing capabilities. But this story concerns more than just Apple-they were the first to make a deal. The increased focus on domestic manufacturing and investment in the U.S. semiconductor industry will create jobs, bolster the economy, and enhance the nation's competitiveness. [Here's how investors can benefit...](   Get More Money Morning Our experts offer special actionable investing and trading research to their subscribers every week [Subscribe Now]( [Image]( You are receiving this e-mail at {EMAIL}, as part of your subscription to Money Morning. To remove your email from this list: [unsubscribe here](. To cancel, or for any other questions or requests, please contact our Customer Service team: Online: [Customer Service Form]( Phone: 888-384-8339 (North America) 443-353-4519 (International) Mail: Money Morning | Attn: Member Services | 1125 N Charles Street | Baltimore, MD 21201 Fax: 410-622-3050 Our Customer Service team is available Monday ­ Friday between 9:00 AM and 5:00 PM ET. © 2023 Money Morning LIVE. All Rights Reserved. Nothing in this email should be considered personalized financial advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized financial advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended in this letter should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company. Protected by copyright laws of the United States and international treaties. This Newsletter may only be used pursuant to the subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), in whole or in part, is strictly prohibited without the express written permission of: Money Map Press. 1125 N Charles Street, Baltimore, MD 21201. [Website]( | [Privacy Policy]( | [Terms & Conditions]( [Twitter]( [Youtube]( [Discord]( [Instagram]( [Tiktok](