Our Take on FOMC Today, 2 Stocks Seeing Bullish Gains
While all eyes will be on the FOMC on Wednesday, few traders anticipate a change in interest rates.
Nothing in the economic reports over the past few months justifies a lowering. If anything, the data leans more toward a quarter-point raise. Don’t get me wrong, I’m not suggesting the Fed should raise, nor do I expect a raise this year. Unfortunately, unless we see significant improvements in the inflation data, we probably won’t see interest rates lower in 2024 either.
After a day’s delay, the market turned bullish on (AAPL) after WWDC. Yesterday’s 7% move pushed shares above $200 on a closing basis for the first time. It’s a clean breakout that the entire world identified all at once. Assuming shares close the week above $200, Apple bulls could enjoy another 10%-plus upside this quarter.
GameStop (GME) successfully raised another $2.14 billion at an average of $28.50 per share, thanks partly to Roaring Kitty. Keith Gill’s return to social media breathed life into the struggling video game retailer. Despite a week of memes that said very little and a livestream that said even less, GameStop shares have nearly tripled since the beginning of May.
Unlike the last meme stock rally, GameStop management was ready to take advantage of the irrationality with two huge capital raises. The company brought in nearly $1 billion in late May, followed by a $2 billion-plus raise this week.
If the stock remains above $20 or $25, the company should hammer the market for as much money as possible. $3 billion can go a long way, but $4 billion or $5 billion can go further. It will be interesting to see how the capital is deployed. Until that is known, the company's long-term value is not much more than its cash value plus the interest it can earn on that cash, reduced by the $100 million or so it burns each quarter.
At the time of publication, Byrne had no positions in any securities mentioned.