Raphael Stevens

Minneapolis Fed President Neel Kashkari on CNBC on Monday cautioned against reading too much into a June pause in the current rate-hiking cycle.
“If we were to skip in June, that does not mean we’re done with our tightening cycle. It means to me we’re getting more information,” he said.

Minneapolis Fed President Neel Kashkari on Tuesday reiterated the central bank’s commitment to bringing inflation under control through monetary policy tightening, and said his biggest fear is that the persistence of price pressures is underestimated.
Anjali Sundaram | CNBC

Minneapolis Federal Reserve President Neel Kashkari on Monday said he’s open to holding off on another interest rate hike next month, but cautioned against reading too much into a pause.
“Right now it’s a close call either way, versus raising another time in June or skipping,” the central bank official said on CNBC’s “Squawk Box.” “Some of my colleagues have talked about skipping. Important to me is not signaling that we’re done. If we did, if we were to skip in June, that does not mean we’re done with our tightening cycle. It means to me we’re getting more information.”

Markets currently are putting about an 83% probability that the rate-setting Federal Open Market Committee holds off on what would be an 11th consecutive increase when it convenes June 13-14, according to the CME Group’s FedWatch tracker of futures prices.
Beyond that, traders see the Fed likely cutting about half a percentage point off rates before the end of the year, a nod toward inflation moving lower and the economy slowing.
Central bank officials have been unified in saying they don’t expect cuts this year. Kashkari said that if inflation doesn’t come down, he would be in favor of increasing rates again.
“Do we then start raising again in July? Potentially, and so that’s the most important thing to me is that we’re not taking it off the table,” he said.
“Markets seem very optimistic that rates are going to fall now. I think that they believe that inflation is going to fall, and then we’re going to be able to respond to that. I hope they’re right,” he added. “But nobody should be confused about our commitment to getting inflation back down to 2%.”

Fed Chair Jerome Powell on Friday suggested that the recent stresses in the banking system could slow down the economy enough that policymakers can afford to be less aggressive.
Kashkari said that’s possible, though he added that so far there have been only scant signs of a more macroeconomic impact from the recent banking problems.
“This is the most uncertain time we’ve had in terms of understanding the underlying inflationary dynamics. So I’m having to let inflation guide me and I think we’re letting inflation guide us. It may be that we have to go north of 6%” on the fed funds rate, he said. “If the banking stresses start to bring inflation down for us, then maybe … we’re getting closer to being done. I just don’t know right now.”
The Fed’s benchmark funds rate is currently set in a target range between 5%-5.25%. In addition to a rate decision, the June meeting will feature an update on the central bank’s forecasts for inflation, GDP and unemployment, as well as the “dot plot” that shows the governors’ future rate expectations. More

Apple phones on display in an Apple store on May 04, 2023 in Miami, Florida.
Joe Raedle | Getty Images

Check out the companies making the biggest moves in premarket trading:
Apple — Shares of the iPhone maker fell about 1% premarket after Loop Capital downgraded Apple’s stock to hold from buy. Loop predicts that the company will fall short of its June quarterly revenue guidance, the firm said in a note Monday.

Meta — The social media company saw its shares dip more than 1% in premarket after news that the firm has been fined a record 1.2 billion euro ($1.3 billion) by European privacy regulators over the transfer of EU user data to the U.S. The Irish Data Protection Commission also told Meta to suspend “any future transfer of personal data” to the U.S. Meta said it would appeal the decision and the fine.
Micron Technology — Shares of the U.S. chipmaker sank more than 4% after China’s Cyberspace Administration barred operators of “critical information infrastructure” in China from purchasing products from Micron. Other chip stocks also fell, with Advanced Micro Devices shedding 1.4% and Nvidia slipping nearly 1%.
PacWest — Shares of the closely watched regional bank rose 3.5% before the bell. The bank sold $2.6 billion worth of construction loans to a Kennedy-Wilson Holdings subsidiary.
Nike, Foot Locker — Shares of Nike and Foot Locker declined 1.5% and 2.4%, respectively, in premarket trading. The move comes after Foot Locker’s lackluster results last week prompted concern over other sports apparel retailers. Foot Locker missed on the top and bottom lines in its first fiscal quarter, and lowered its guidance.
DraftKings — Shares of the sports betting stock rose about 3% before the bell. UBS upgraded shares to a buy from neutral rating, saying that expansion into new markets should fuel growth.

Norfolk Southern, CSX — Shares of the railroads added 1.8% and 1.5%, respectively, in premarket trading. Norfolk Southern was upgraded by Citi to buy from neutral, while Wells Fargo upgraded the stock to overweight from equal weight. CSX was also upgraded by Citi to buy.
Catalent — Shares of the pharmaceutical company declined 2.5% Monday morning. Catalent was downgraded by JPMorgan to neutral from overweight on Friday, with the Wall Street firm citing current productivity issues and macro headwinds among its reasons. Shares surged 15.6% during the previous trading session after the company shared a business update.
— CNBC’s Tanaya Macheel, Yun Li, Alex Harring, Hakyung Kim, Samantha Subin and Sarah Min contributed reporting. More

JPMorgan Chase will generate about $84 billion in net interest income this year, the New York-based bank said Monday in slides for an all-day investor presentation.
That’s $3 billion higher than guidance given in April, when JPMorgan raised its net interest income outlook by $7 billion.
Longtime JPMorgan CEO Jamie Dimon is expected to speak in a question-and-answer session this afternoon.

Jamie Dimon, chairman and chief executive officer of JPMorgan Chase & Co., during a Bloomberg Television interview at the JPMorgan Global High Yield and Leveraged Finance Conference in Miami, Florida, US, on Monday, March 6, 2023.
Marco Bello | Bloomberg | Getty Images

JPMorgan Chase raised a key performance target on the heels of its government-brokered takeover of First Republic earlier this month.
The bank will generate about $84 billion in net interest income this year, the New York-based bank said Monday in slides for an all-day investor presentation.

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That’s $3 billion higher than guidance given in April. At the time, JPMorgan raised its net interest income outlook by $7 billion, a move that spurred JPMorgan’s biggest earnings-day stock bump in 20 years.
The bank added that “sources of uncertainty” around deposits and the economy could impact its forecast. Net interest income is the difference between what banks earn from loans and investments and what they pay to depositors.
JPMorgan, the biggest U.S. bank by assets, has emerged as a beneficiary of the recent regional banking tumult. It was one of the only banks to see deposits climb in the first quarter as panicked customers sought safety at big institutions; then it won a weekend auction for First Republic, a move expected to boost earnings and advance its push for wealthy clients.
The bank on Monday also disclosed expectations that expenses would rise to $84.5 billion, unchanged from previous guidance, excluding $3.5 billion in costs to integrate First Republic.  
Longtime JPMorgan CEO Jamie Dimon is expected to speak in a question-and-answer session at the investor day this afternoon.

He will likely be asked about the U.S. debt ceiling negotiations, as well as succession planning after rival CEO James Gorman of Morgan Stanley last week announced plans to step down within a year.
This story is developing. Please check back for updates. More

Wise shares dropped around 4% Monday morning after the money transfer firm announced its CFO Matt Briers will resign next year.
Briers will leave the firm after an eight-year period that saw Wise go from a scrappy foreign exchange challenger to a publicly-listed fintech with millions of users.
Kristo Kaarman, Wise’s CEO, is going on sabbatical leave from September, Wise said.

Kristo Kaarmann, CEO and co-founder of Wise.
Eoin Noonan | Sportsfile | Getty Images

Shares of British fintech firm Wise slipped Monday, after the company said its Chief Financial Officer Matt Briers is leaving the company next year, while its CEO Kristo Kaarman will go on paternity leave starting in September.
Wise shares were down around 3% as of 10:50 a.m. London time, following the management announcements.

“A comprehensive search for a new CFO will commence immediately,” Wise said in a Monday update to investors.
Kaarman, who co-founded Wise alongside Taavet Hinrikus, will take an “extended Wise sabbatical” between September and December to spend time with his family, the company said.
Wise’s Chief Technology Officer Harsh Sinha will step up to take the CEO reins in the interim.
Briers will step down as Wise CFO in March 2024 — once Kaarman has returned from a sabbatical break — to fully recover from a cycling accident that occurred last year.
“After almost eight years it’s time for me to think about my life after Wise,” Briers said in a statement.

“I’m incredibly proud of what we have achieved in these early chapters at Wise and could not be more excited about what is ahead for the business. Wise is growing fast, with a massive opportunity in front of us, and we’ve bucked the trend by working out how to do this profitably.”
In February 2022, Briers was involved in a cycling accident where he went under the wheels of a bus. Wise appointed an interim CFO in his place at the time, while Briers recovered at home.
Briers said that Wise “will likely have many CFOs in its first century and this is simply me starting the process of handing over the reins to the next one.”
In his time as CFO, Briers took Wise from a scrappy money transfer upstart to a publicly-listed financial technology giant with millions of users.
Wise went public in 2021 in London in a rare direct listing — an IPO alternative whereby companies offer stock directly to the public without employing financial intermediaries or creating new shares.
Briers is the second CFO of a major U.K. fintech firm to announce his departure this month — on May. 11, British digital banking startup Revolut said its CFO Mikko Salovaara was leaving after only two months in the job for “personal reasons.”

Shakeup

Analysts at Jefferies said that the management shakeup could be a mid-term positive development for Wise shares, which have underperformed the broader European payments and fintech sector lately.
They speculated that Sinha could be moved up into the CEO role permanently, with Kaarmann becoming executive chairman instead.
This “would allow Käärmann to focus on a broader role to drive the business, while leaving Sinha, who gained experience at PayPal and eBay, to the daily execution,” Jefferies analysts said.
Wise has not indicated that Kaarmann plans to step down as CEO permanently. More

The investor behind a top 10 global ETF sees a bearish trend in the Big Tech rally.
Anna Paglia, who oversees the tech-heavy Invesco QQQ Trust, sees signs investors are starting to take a defensive approach to the group.

“If you look at the flows that are flattish year to date, that indicates there’s really not a high conviction in the short term,” the firm’s global head of exchange-traded funds and indexed strategies told “ETF Edge” this week.
The QQQ, which tracks the Nasdaq 100 index, hit a 52-week high on Friday. Plus, it has outperformed the S&P 500 by more than 17% in 2023.
More than half of the fund’s allocations are in technology stocks. The ETF’s top holdings include Microsoft, Apple, Amazon and Alphabet — which are up more than 30% since the start of the year.
Two other top holdings, Meta Platforms and Nvidia, are up more than 100% for the year. Nvidia is set to report its quarterly earnings on Wednesday.
“People don’t know if … this performance is only driven by the mega caps or if there’s more in there,” she said.

However, Paglia suggests the issues aren’t permanent.
“We are still firm believers in the QQQ, but it’s a wait and see for our clients,” she said.
The QQQ was up almost 4% this week.

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