Good morning investors!

If this is your first time reading, welcome to The Investor’s Edge — a thriving community of more than 16,000 subscribers striving to be better investors with an edge in the market.

Every Wednesday we publish “The Mid-Week Wrap-Up” — your ticket to being well informed and staying ahead in the investment game!

This report is designed to help investors of all skill levels break down important stories/topics within the stock market. And best of all, we cut through all of the BS and give you exactly what you need to know in easy to digest, bite sized pieces of content.

This article is designed to truly give you that EDGE in the day ahead!

Grab your afternoon pick me up and let’s dive in.

Market Talk

Tech and mega caps remain the main driver in the market, once again pulling markets higher this week as both the S&P 500 and Nasdaq continue to make new all-time highs.

3 Stories Moving the Market

These are some of the biggest stories so far this week that are having an influence on market action.

Fed Chair Powell says holding rates high for too long could jeopardize economic growth

Federal Reserve Chair Jerome Powell expressed concerns about the risks of keeping interest rates too high for an extended period, which could harm economic growth. 

Speaking at his Capitol Hill appearance, Powell noted the economy and labor market remain strong, with some cooling and easing in inflation. 

Powell emphasized the importance of achieving the 2% inflation goal while acknowledging that reducing policy restraint too slowly or insufficiently could harm economic activity and employment.

While markets anticipate rate cuts starting in September, the Federal Open Market Committee (FOMC) members indicated only one cut in their June meeting.

Microsoft drops its observer seat on OpenAI board amid regulatory scrutiny

Microsoft announced it would relinquish its observer seat on the OpenAI board due to regulatory scrutiny in Europe and the U.S.

Microsoft’s Deputy General Counsel, Keith Dolliver, explained that while the seat provided valuable insights, it did not compromise OpenAI’s independence.

The European Commission had raised potential antitrust concerns over Microsoft's involvement in generative AI, specifically pointing to its partnership with OpenAI. Despite concluding that the observer seat did not affect OpenAI’s independence, EU regulators seek more third-party input. The UK's Competition and Markets Authority also has concerns.

Microsoft initially took the non-voting seat to address questions about its intentions following a period of upheaval at OpenAI, including CEO Sam Altman's brief firing and rehiring. Microsoft's total investment in OpenAI has reached approximately $13 billion, making it a leading player in AI development.

Legal experts suggest Microsoft’s decision is influenced by ongoing competition and antitrust scrutiny of big tech's influence over AI.

📚 EDGE-UCATION: What is an observer seat on a board of directors?

An observer seat on a board is a position that allows an individual or representative to attend and observe board meetings without having the rights or responsibilities of a formal board member. Observers do not have voting rights and typically do not participate in decision-making processes. However, they can provide insights, offer advice, and stay informed about the board's discussions and activities. This role is often used by investors, partners, or stakeholders who want to stay engaged with the organization's governance without the full commitment of a directorship.

Boeing to plead guilty to criminal fraud charge stemming from 737 Max crashes

Boeing has agreed to plead guilty to criminal fraud related to the fatal 737 Max crashes, branding the company a felon but allowing it to avoid trial.

The plea deal includes a fine of up to $487.2 million, though the Justice Department recommended halving it to $243.6 million due to a prior agreement.

The deal, which requires federal judge approval, could hinder Boeing's ability to sell to the U.S. government, though waivers may be sought. The Defense Department will review Boeing's remediation plans and agreement to determine necessary actions.

The deal also mandates an independent monitor to oversee Boeing's compliance for three years, a $455 million investment in compliance and safety programs, and meetings between Boeing's board and crash victims' families.

In Other News

In this section we'll be curating a selection of news headlines we think you'll find interesting. If a topic catches your eye, click the provided links to read more about it.

• Eli Lilly to Buy Biotech Company Morphic for $3.2B, Boost IBD Presence

• TSMC second-quarter revenue jumps on AI boost, handily beats market forecasts

• AMD to acquire Finnish startup Silo AI for $665 million to step up in AI race

• Intuit to cut 1,800 jobs as it looks to increase AI investments

• Paramount agrees to merge with Skydance, ending monthslong negotiations and Redstone era

• Samsung bolsters AI in foldable phones, health monitoring in smartwatch, ring

• Etsy CEO says company is escaping ‘race to the bottom’ and getting back to its artisan roots

• Honeywell to buy Air Products' LNG unit for $1.81 billion as deal-making spree continues

• Mortgage refinance demand drops further

The Second Half

Although it’s been a quiet week thus far, the next two days are going to pack a punch as we get key inflation data and earnings season officially begins.

Earnings Reports

Earnings season will officially be under way after the next two days. At the Investor’s Edge we will be watching Pepsico, Delta, JPMorgan and BlackRock.

Here is the calendar of earnings releases scheduled for the rest of the week:

Economic Reports

Here is the calendar of events scheduled for the remainder of the week:

Thursday’s CPI report will be the major catalyst for how markets end the week. We will be watching this one closely and sharing our takeaways live on the Discord. We will also be watching if jobless claims continue to rise, the inflation data from the PPI report and whether or not the consumer believes the economy is strong.

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Thank you for reading this edition of the Mid-Week Wrap-Up.

Until next time investors!

Mark & Chris

The Investor’s Edge

Disclosure

This is not investing advice. It is very important that you do your own research and make investments based on your own personal circumstances, preferences, goals and risk tolerance.