Commentary: The Middle East is messing up Trump's economic plan

Key Points

• Federal Reserve's "dot plot" indicates two interest rate cuts expected in 2025, consistent with March projections, though a growing divide among Fed officials is evident.
• The Fed maintained its benchmark interest rate at 4.25%-4.5%, marking the fourth consecutive meeting without a change since a 0.25% cut in December.
• Updated economic forecasts show higher projections for inflation (3.1%) and unemployment (4.5%) for 2025, alongside a lowered GDP growth forecast of 1.4%.
• Seven FOMC members now anticipate no rate changes in 2025, reflecting a more hawkish stance compared to March, while twelve predict at least one cut.
• Chair Jerome Powell highlighted the divergence in risk assessment among members, citing uncertainties in inflation and labor market trends amid a "foggy" economic outlook.

Summary

The Federal Reserve's latest policy update reveals a cautious stance on interest rates, maintaining the benchmark range at 4.25%-4.5% for the fourth consecutive meeting since a December cut. The central bank's "dot plot" projects two rate cuts for 2025, unchanged from March, though a split among officials is evident, with seven now expecting no changes compared to four previously. Updated economic forecasts in the Summary of Economic Projections (SEP) raise concerns, predicting core inflation at 3.1%, unemployment at 4.5%, and GDP growth at just 1.4% for the year, signaling fears of stagflation. Fed Chair Jerome Powell noted the growing divide among members, attributing it to differing risk assessments on inflation persistence and labor market weakness during uncertain times. The Fed's approach remains tentative as it navigates policy unknowns, including the Trump administration's trade and tax proposals, while markets anticipate one to two cuts in 2025.

Key Points

• China's 618 shopping festival, originally a single-day event for JD.com, concluded on June 18 after over a month of promotions across major e-commerce platforms like JD.com and Alibaba, starting from May 13.
• Despite efforts to boost spending through deeper discounts and government subsidies, consumer enthusiasm remains low due to economic concerns such as employment instability, stagnant wages, and the property crisis.
• Sales data for 618 has not been fully disclosed recently, but last year saw a 7% decline to 742.8 billion yuan ($103.31 billion), while this year JD.com reported over 2.2 billion orders and Alibaba noted 453 brands exceeding 100 million yuan in GMV.
• Analysts suggest that extended sales periods and year-round discounts have reduced the excitement for major shopping events, with consumers like Xu Binqi noting that deals are available anytime, diminishing the urgency to buy during 618.
• Government subsidies and an earlier start to 618 contributed to a 6.4% retail sales growth in May, though potential pauses in subsidy programs could impact June sales and overall consumption.

Summary

China's 618 shopping festival, once a single-day event marking JD.com’s founding, concluded on June 18 after over a month of promotions starting May 13, involving major platforms like JD.com and Alibaba. Despite extended sales periods and deeper discounts, consumer spending remains subdued amid economic challenges including employment concerns, stagnant wages, and a property crisis. Retailers and the government have introduced subsidies to stimulate demand, contributing to a 6.4% retail sales growth in May, the highest since December 2023. However, year-round discounts have diminished the allure of such events, with many consumers like Xu Binqi and Eve Wang opting to buy only as needed rather than stockpiling during 618. While specific sales figures for this year are undisclosed, JD.com reported over 2.2 billion orders, and Alibaba highlighted 453 brands surpassing 100 million yuan in GMV. Analysts note that the prolonged festival helps sustain engagement but warn that pauses in subsidy programs could dampen June sales. Last year, 618 sales dropped 7% to 742.8 billion yuan ($103.31 billion), reflecting ongoing retail struggles. The evolving consumer mindset and economic pressures continue to challenge the effectiveness of standalone promotional events in driving significant growth.

Key Points

• Robinhood's crypto business remains a major revenue driver, contributing 43% of total transaction revenue in Q1 with $252 million, despite a slight dip.
• The company is hosting its first international crypto-focused event, "To Catch a Token," on June 30 in France, promising significant unveilings.
• Robinhood reported strong May metrics with total platform assets at $255 billion (up 89% year-over-year) and funded customers at 25.9 million.
• Analysts from Mizuho and Goldman Sachs raised price targets to $80 and $82 respectively, citing solid May results and growth potential.
• New mobile app features, including simulated options returns and advanced charting, are being introduced to enhance trading capabilities.

Summary

Robinhood Markets (HOOD) is making waves with its focus on cryptocurrency and robust growth metrics, as highlighted in a recent article on TheStreet. The company's CEO, Vlad Tenev, announced the upcoming "To Catch a Token" event on June 30 in France, marking Robinhood’s first international crypto-focused initiative with promises of groundbreaking reveals. Despite a slight dip in Q1 crypto revenue to $252 million, it still accounts for 43% of transaction revenue, showcasing its significance. May metrics were impressive, with platform assets reaching $255 billion (up 89% year-over-year) and funded customers growing to 25.9 million. Analysts are optimistic, with Mizuho and Goldman Sachs raising price targets to $80 and $82, respectively, driven by strong performance and growth potential in a $600 billion market. Additionally, Robinhood is enhancing its mobile app with tools for simulated options returns and advanced charting. Despite missing an S&P 500 inclusion, the company’s stock has surged over 250% in 2024, bolstered by strategic acquisitions like Bitstamp and a favorable crypto environment under President Trump’s policies. Robinhood continues to position itself as a fintech leader with innovative products and expanding market share.