Fed’s Bullard Sees Interest Rate Increase Happening In 2022

Plus, Boeing’s largest 737 Max plane is expected to take its initial flight today, Morgan Stanley said Facebook remains its top social media stock pick, and Adobe delivered an earnings beat.

Stocks were lower at the open on Friday with the Dow dropping 200 points, or 0.6%. The S&P 500 fell 0.4%, while the Nasdaq slid by nearly 0.5%.

St. Louis Federal Reserve President James Bullard said that he sees an initial interest rate increase happening in late 2022 as inflation picks up, an estimate that is quicker than the outlook the FOMC released on Wednesday. “I put us starting in late 2022. We’re expecting a good year, a good reopening,” Bullard said. “But this is a bigger year than we were expecting, more inflation than we were expecting. I think it’s natural that we’ve tilted a little bit more hawkish here to contain inflationary pressures.”

Goldman Sachs has begun trading Bitcoin futures with Galaxy Digital, the crypto merchant bank founded by Mike Novogratz. The trades represent the first time the bank has used a digital assets firm as a counterpart since it set up its cryptocurrency desk last month, and it could be a preview of what’s to come for other Wall Street banks. “There’s a whole dynamic with the major banks that I’ve seen time and time again: safety in numbers,” said Galaxy co-president Damien Vanderwilt. “Once one bank is out there doing this, the other banks will have FOMO and they’ll get on-boarded because their clients have been asking for it.”

Boeing‘s largest 737 Max model is set to take its initial flight today, marking the latest milestone in the jet family’s comeback from tragedy and subsequent grounding. The 230-seat 737-10 plane closes the gap between Boeing’s 178 to 220 seat 737-9, and the 185 to 240 seat A321neo, which dominates the top end of the narrow body jet market, worth some $3.5 trillion over 20 years. Today’s flight is scheduled for 10 a.m. Seattle time.

Morgan Stanley said Facebook remains its top pick among large cap social media stocks. “We remain most positive on FB within the large cap social media names as we see their leading ROI, product innovation, and monetization call options (Reels, Marketplace, Shopping, etc), enabling them to navigate through difficult near-term engagement headwinds,” Morgan Stanley analysts said. “We also note that even a slight increase in News Feed ad load could offset any engagement decline. In our view, the extent to which FB can deliver on topline can lead to $16+ of free cash flow per share next year, painting a path toward our $440 bull case (~30% upside).”

And Adobe shares are up nearly 2% at the time of writing after the company posted better-than-expected earnings results for its fiscal second quarter. Adobe reported revenue of $3.84 billion in the quarter, up 23% from a year ago. “Adobe had an outstanding second quarter as Creative Cloud, Document Cloud and Experience Cloud continue to transform work, learn and play in a digital-first world,” said Shantanu Narayen, president and CEO, Adobe. “Our innovative product roadmap and unparalleled leadership in creativity, digital documents and customer experience management position us for continued success in 2021 and beyond.”

Stocks We’re Watching

Revolve Group Inc (NYSE: RVLV): Revolve Group announced yesterday that it is set to join the Russell 3000 index at the conclusion of the 2021 Russell indexes annual reconstitution, effective after the open on June 28. “Joining the Russell 3000 Index will increase REVOLVE’s exposure to the investment community at an exciting time after we delivered record profitability and cash flows in 2020 and returned to strong year-over-year growth in net sales during the first quarter of 2021 as economies began to reopen,” said chief financial officer Jesse Timmermans. “We welcome the enhanced visibility of our long-term growth potential and look forward to sharing our future milestones with a broader investment community as we continue on our vision of building an iconic brand and the fashion destination for the next-generation consumer.”