Breakfast | S&P, Nasdaq hit new highs with five consecutive gains, Goldman Sachs and Morgan Stanley sound the alarm for a US stock market pullback

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Overnight Morning Market

The market is optimistic that any signs of economic weakness later this year will lead to a rate cut by the Federal Reserve. The June CPI data released on Thursday is expected to continue to boost rate cut expectations. On Monday, the Nasdaq and S&P 500 both hit new highs for the fifth consecutive day. The S&P 500 and Nasdaq hit historical highs for the 35th and 24th time this year, respectively.

Apple rose by 0.65%, reaching a new closing high.

TSMC's market value surpassed $1 trillion for the first time this year, with a gain of over 80%. The ADR trading price in the U.S. has a significant premium compared to its stock listed in Taipei. Many Wall Street brokerages have raised TSMC's target stock price, citing a surge in demand for artificial intelligence, which may lead to price increases by 2025 to boost earnings.

Tesla rose by 0.56%, achieving a nine-day winning streak with a cumulative gain of 38.5% on the 9th day. Apple rose by 0.65% to a historical high, marking a five-day winning streak, surpassing Microsoft in market value to reclaim the top spot. Nvidia rose by 1.88%, with a market value of $3.15 trillion ranking third in the U.S. stock market. Nvidia's double long ETF rose by 3.67%. Meta fell by 1.99% after briefly hitting an intraday record high.

Most Chinese concept stocks fell. Alibaba dropped by about 1.4%, Li Auto by over 1.3%, Baidu and JD.com by about 1.1%, Bilibili rose by over 2.4%, Sohu rose by over 5.1%, XPeng dropped by over 6%, with the company confirming the departure of the head of the automotive technology center. Niu Technologies rose by 16% and will expand retail operations to over 800 Best Buy stores across the U.S.

Biopharmaceutical company Morphic rose by 75.06%. Eli Lilly announced on Monday that it will acquire Morphic for $57 per share in cash, a 79% premium over last Friday's closing price.

Blue Chips and Hot Stocks

Peru's Foreign Minister: BYD may build an assembly plant in Peru.

Media: Xiaomi's third car model will be an extended-range SUV.

Li Auto's cumulative delivery of the L7 model exceeded 200,000 units.

UBS raised Nvidia's target price from $120 to $150.

Industry insiders: Apple has raised its iPhone 16 series production target to around 90 million units this year.

Market news: Nike rehires retired senior executives to help address declining sales issues.

U.S. Department of Justice officials: Boeing agrees to admit to conspiracy to commit fraud in the investigation of fatal plane crashes. Boeing will pay a $243.6 million criminal fine as part of the agreement.

The Canadian government stated that it is waiting for Boeing's legal proceedings in the U.S., and once confirmed, Canada will assess the impact on the $10.4 billion reconnaissance aircraft deal.

The Federal Aviation Administration (FAA) has ordered inspections of 2,600 Boeing 737 aircraft as emergency oxygen masks may malfunction.

United Airlines confirmed that on the morning of July 8th local time, a Boeing 757 aircraft lost a tire during takeoff from Los Angeles International Airport.

Chips and Artificial Intelligence

Co-Chief Investment Officer of Bridgewater Associates: The prosperity of artificial intelligence is different from the tech bubble of 1999 Tech giants such as Microsoft and Qualcomm are engaging in a lightning marketing battle for the new "AI personal computer", promising to embed AI functionality into laptops and desktop computers. However, according to industry research firm IDC, only 3% of personal computers shipped this year can meet Microsoft's AI processing capability threshold. Morningstar analyst Eric Compton stated that the practicality is limited because, apart from Microsoft, few software manufacturers are developing functions that utilize new chips optimized for AI tasks.

Samsung's union in South Korea initiated a three-day strike, claiming that the strike would affect chip production. Samsung later responded that the strike would not impact chip output.

Macro: Taking You Around the World

Commodity Futures Trading Commission (CFTC) of the United States: As of the week ending July 2, stock fund managers reduced their net long positions in CME S&P 500 by 24,005 contracts, decreasing to 953,130 contracts.

Morgan Stanley: US Stocks Highly Likely to Retreat by 10%

Morgan Stanley strategist Mike Wilson stated that with increasing uncertainties surrounding the US presidential election, corporate earnings, and Federal Reserve policies, traders should prepare for a pullback in the US stock market. "There is a high probability of a 10% pullback at some point between now and the US election, and the third quarter will be quite turbulent."

Goldman Sachs Analyst: Expecting a Large Outflow of Funds from US Stocks in August, Awaiting Election Results

Goldman Sachs mentioned that the US stock market is likely to experience two painful weeks starting from early August, with a significant passive outflow of funds by investors potentially weakening returns. If corporate earnings disappoint, it will force systematic funds to sell stocks. August is typically the worst month of the year for stock fund inflows. Funds for the third quarter have already been deployed, and there are no expected inflows in August. "Buyers have run out of ammunition, I am watching for outflows," as funds usually flow out of the US and global stock markets before elections, then resume inflows in November. Hedge funds' net exposure is usually lower before elections.

Andrew Tyler from J.P. Morgan's trading department stated that he remains bullish, but recent weak economic data has slightly decreased his confidence. Scott Chronert from Citigroup issued a warning about a potential pullback.

US consumer credit in May was $11.354 billion, exceeding expectations of $10 billion and up from the previous $6.403 billion.

Wells Fargo: US inflation in June is expected to confirm a cooling trend, with the CPI in June likely to stabilize but still on a downward trajectory, with an expected month-on-month increase of 0.1% and the core index likely significantly lower than the first quarter's average monthly increase of 0.35%, expected to rise by 0.24%.

Biden refuses to withdraw from the presidential race. The White House avoided questions about a Parkinson's disease doctor's visit, stating that Biden is in good condition.

Media: Trump will announce his vice presidential candidate next Monday.

China's Ministry of Commerce responds to unfounded remarks from the EU regarding anti-subsidy investigations on Chinese electric vehicles: Since the EU initiated anti-subsidy investigations on Chinese electric vehicles, China has consistently expressed strong opposition through various bilateral channels and has always urged the EU to handle trade frictions properly through dialogue and consultation Guangzhou relaxes housing policies for Hong Kong, Macao, Taiwan, and foreign nationals: There is no limit on the number of residential properties over 120 square meters that can be purchased