Above the Fold       

Despite Stock Surge, Fed Far From Over 

There’s a clear disconnect between what most investors believe and what the Federal Reserve is likely to do. Many stocks, including rate-sensitive groups such as tech, have been soaring; some to new all-time highs. The move suggests that interest rates are at their peak, and we are set for not only a “smooth landing” but even more earnings growth. Bets are still being made that rates will be lower by the end of 2023, but there’s no such advice coming from Fed Chairman Jerome Powell. 
 

In fact, it is very likely we will see another one, two or even three rate hikes in the coming months as the Federal Open Market Committee consensus is that rates have not been “restored for long enough.” Chairman Powell, speaking at a recent discussion with other central bankers at the European Bank’s annual symposium said, “We believe there’s more restriction coming,” quite the opposite of what stocks seem to be anticipating. In fact, he didn’t even mention a plateau, let alone a reduction, further hinting at possibly raising rates at every other meeting, which he believed represented an “effort to get more information from the data [and] to see how much restraint is coming through in the pipeline.” Simply put, America’s economy is still looking strong on paper and rates are likely to continue higher into the end of the year. It’s unknown when stocks will react to this reality, but at a minimum, we remain extremely cautious and conservative going into the back half of the year.

Three Things                                                           

Vornado Bets on Penn Station, Commuters 

While many see the future of commuting and full-time, in-office workers grim, Vornado reality is betting more than $1.2 billion on the return of passengers and workers through New York’s Penn Station. The real estate giant will spend the money rehabbing two large office buildings near the rail and bus hub in hopes that employees and riders return to the area, even if only for a shortened work week. They hope that companies can lure commuters with convenience so they wouldn’t have to take additional public transportation to arrive at the office.  

Key Consumer Staple Company Misses 

General Mills, the maker of food staples such as Cheerios cereal and Bisquick pancake mix, reported earnings that fell short of analyst expectations. Its revenues rose just 3% year over year, but the gain came with several caveats. The increase in topline growth was solely due to price increases on its products as overall sales volume fell 6% — with the biggest drop coming from its key North American market. Total sales for the quarter ended May 28 came to $5.03 billion, missing Wall Street analyst forecasts for $5.18 billion, according to FactSet.  

Soros Snags Vice 

The once venerable Vice media, which fell into bankruptcy last month, will be acquired by Fortress Investment Group and Soros Fund Management for $225 million. Though the deal still has to be approved by a bankruptcy court, it’s likely to move forward and caps more than a year of attempts to sell the beleaguered company. Vice has struggled to keep up with social-media-centric competition and the more complex ad-selling models that its peers are utilizing in the marketplace.  

In the Know                                                           

iPhone Goes on Sale! 

It’s hard to believe, but it’s been 16 years since the first iPhone went on sale back in 2007, revolutionizing the industry and changing the way we interact with our devices. The iPhone ditched styluses and keypads, defying the most popular interfaces. Its touchscreen allows users to manipulate a newly designed interface that would become the basis for so many devices we use today.