The Start of a Bull Market Is Good News. Expect This Next.

Here’s the bear case: The S&P’s gains have been carried by just seven technology companies. That’s coming to be known as a skinny bull market, and it wouldn’t take much to drag those few names down to undermine the advance.

The Federal Reserve, once thought to be delivering interest-rate cuts by the end of the year, now looks like it will just take a break next week and then keep hiking. Inflation is still too hot, and the labor market is still too tight for the Fed to consider easing. The sluggish rise of stocks since October is set to remain tepid at best.

Here’s the bull case: Because the S&P’s gains have been driven by so few stocks that leaves plenty of room for the rest of the index to catch up, as if they’re attached by a rubber band, and that will fatten up the bull market the rest of the year.

Sure, the Fed may still be hiking, but most of that information is already priced into stocks. Unemployment remains historically low, and price gains are slowing–more data are due on Tuesday. Overall, the economy has managed to fend off a recession for much longer than many had imagined, despite the worst inflation and most aggressive rate hikes in 40 years.

So decide for yourself. The beauty of the skinny bull is in the eye of the beholder.

—Brian Swint

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Try your hand at the Barron’s crossword puzzle and sudoku games, now running daily along with a weekly digital jigsaw based on the week’s cover story. To see all puzzles, click here.

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Trump Has Been Indicted Over Classified Documents

A federal grand jury has indicted Donald Trump as part of its investigation into the discovery of classified documents at his Mar-a-Lago resort in Florida, The Wall Street Journal and other media reported. It’s the first time that the federal government has brought criminal charges against a former president.

• In an email, Trump wrote that the Biden administration has informed his attorneys he has been indicted. “I have been summoned to appear at the Federal Courthouse in Miami on Tuesday, at 3 PM,” he noted. “I never thought it possible that such a thing could happen to a former President of the United States.”

• Trump sent an email to supporters, calling the investigation a “witch hunt,” MarketWatch wrote. It also cited a four-minute video posted on Truth Social Platform, in which it said Trump claimed “the whole thing is a hoax,” and “I’m an innocent man.”

• Trump was charged with seven counts, the Journal reported, citing a person familiar with the matter. The charges include violations of the Espionage Act. Classified documents relating to the time when President Biden was vice president have been previously found at Biden’s home and office, the Journal said, and are the subject of a separate investigation.

What’s Next: Trump is expected to surrender to authorities next week, according to the New York Times, which cited “a person close to” him. On Truth Social, the former president said he was scheduled to be arraigned in federal court in Miami at 3 p.m. on Tuesday, the Times reported.

—Rupert Steiner

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GM Vehicles Will Plug Into Tesla’s Fast Chargers, Too

General Motors
drivers will be able to plug into
Tesla’s
12,000 fast Superchargers next year, and its electric vehicles will use the same charging hardware as Tesla starting in 2025. GM CEO Mary Barra said it would help the industry move toward a single North American charging standard.

• Tesla’s Supercharger network, with more than 17,700 fast chargers at more than 1,650 locations, is the nation’s largest and seen as the most reliable, The Wall Street Journal said. GM’s move is the latest endorsement of Tesla’s charging technology, the North American Charging Standard, or NACS, as the industry standard.

• Ford Motor
  and Tesla stock soared after announcing last month that Ford’s customers will be able to use Tesla’s 12,000 Superchargers starting in 2024. Ford will also adopt the charging hardware Tesla uses in about two years. Ford has increased production of F-150 Lightning XLT pickups.

• Both auto makers say enabling their EV customers to access Tesla’s charging network instantly expands the number of locations where they can recharge, even if they will initially need an adapter to do so. GM’s shares rose 5% in late trading Thursday.

• Tesla shares rose Thursday for a 10th consecutive day, rising 4.6% to $234.86, and was the most active in the Nasdaq 100 Index Thursday, per Dow Jones Market Data. Electrek reported that Tesla plans to make 375,000 Cybertrucks a year. Tesla didn’t respond to Barron’s request for comment.

What’s Next: Sharing its network with non-Tesla vehicles could help Tesla qualify for billions of federal dollars as the U.S. seeks to expand the nation’s EV charging infrastructure. Tesla gains free advertising and more money from its charging network.

—Janet H. Cho and Al Root

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Federal Student Loan Borrowers Should Prepare to Resume Payments

Biden administration officials are preparing for the Supreme Court potentially killing a student loan forgiveness plan that sought to wipe out an estimated $430 billion in loans, The Wall Street Journal reported. If overturned this month, payments will resume on borrowers’ federal loan balances, and interest will begin accruing again.

• If forgiveness is upheld, borrowers with Pell grants will have up to $20,000 canceled, and others will have up to $10,000 of federal loans forgiven. Average monthly loan payments range from $270 to $400, said Mark Kantrowitz, author of How to Appeal for More College Financial Aid.

• Apart from the Supreme Court ruling, payments paused during the Covid-19 pandemic are also set to resume this fall. Student loan recipients should begin preparing now, experts say. Congress’ deal to raise the debt ceiling doesn’t allow further extensions of the payment suspensions after Aug. 30.

• Borrowers will receive billing statements or other notice at least 21 days before payments are due, the Education Department said. That means the first payments will be due around late September or early October.

• The Biden administration has approved $14.5 billion in borrower defense claims for 1.1 million people, in addition to approving $42 billion in Public Service Loan Forgiveness claims for more than 615,000 borrowers since October 2021, the Journal reported.

What’s Next: The Biden administration has proposed expanding the Revised Pay As You Earn (REPAYE) program, including amending terms to offer $0 monthly payments for borrowers making less than roughly $30,600 annually and borrowers in a family of four making less than about $62,400.

—Elizabeth O’Brien and Janet H. Cho

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El Niño’s Arrival Could Trigger Global Commodity Price Spikes

As the East Coast continued to experience a thick plume of smoke from Canadian wildfires, weather officials declared another El Niño has arrived. The weather pattern, characterized by above-average temperatures on the surface of the Pacific Ocean, can cause severe weather, triggering swings in commodity prices.

• The National Weather Service said chances are good that it will be particularly strong this time. El Niño could bring milder U.S. temperatures near-term, Citigroup analysts said, lowering demand for air conditioning, which could hit results at utilities such as
  CMS Energy,

  DTE Energy,
  and
  Duke Energy.

• A weaker Atlantic hurricane season could lower oil and gasoline prices because oil rigs in the Gulf of Mexico could remain operational. Liquefied natural gas exports, by such companies as
  Cheniere Energy,
  would also face less risk of being disrupted.

• Insurers are pulling out of disaster-prone California, Louisiana, and Florida. State Farm will stop selling new homeowner policies in California, for example. From 2018 to 2022, the U.S. saw an average of 18 weather disasters every year with more than $1 billion losses.

• Wheat prices stabilized after spiking on Tuesday when a dam collapsed in a key agrarian region of southern Ukraine. The spike won’t affect consumers down the line, economists said. Ukraine has planted less wheat in that region since Russia’s 2022 invasion, and wheat prices are down 20% from last year.

What’s Next: The price of wheat contributes only a small percentage to U.S. retail prices. The loss of production in Ukraine’s flooded region isn’t going to be material, said Tanner Ehmke, lead economist for grains and oilseeds at CoBank. “I wouldn’t be hoarding bread anytime soon.”

—Avi Salzman, Hannah Ziegler, and Janet H. Cho

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Meta’s Zuckerberg Lays Out AI Plan at Employee Meeting

Meta Platforms
CEO Mark Zuckerberg told employees about how he plans to get the social media and alternate reality company back on track, including his vision for where artificial reality fits in with the parent of Facebook and Instagram, according to Bloomberg. The remarks came at an all-hands meeting.

• Meta’s top priorities are incorporating AI into its products and the metaverse—the virtual-reality platform that Zuckerberg views as the future of online connections between people, the report said. The meeting comes after thousands of job cuts and spending cuts.

• Zuckerberg spoke for about a half-hour, the New York Times reported, and other executives presented, including Chris Cox, the chief product officer, who detailed plans to improve the Reels short-video product. Executives also talked about a new social app that would be similar to Twitter.

• Zuckerberg detailed specific AI products, Bloomberg reported, citing a spokesperson. They include AI agents, which are chatbots for Messenger and WhatsApp, an AI media editing tool for Instagram stories, AI chatbots for employees, and a productivity assistant.

• The company wants to use open-source technology, the Times reported. That means it will share its AI work with researchers who want to build their own algorithms on top of what Meta has already produced. Zuckerberg said the approach enables more scrutiny.

What’s Next: Zuckerberg encouraged employees to try out new ideas at a generative AI “hackathon” Meta is holding in July, Bloomberg reported. This type of AI, which creates text and images based on prompts, has caught fire since the introduction of OpenAI’s ChatGPT chatbot.

—Liz Moyer

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Do you remember this week’s news? Take our quiz below to test your knowledge. Tell us how you did in an email to [email protected].

1. How many additional barrels of oil a day did Saudi Arabia say it is planning to cut next month at the latest OPEC+ meeting as concerns over slowing economic energy demand grow?

a. 1 million

b. 2 million

c. 3 million

d. 4 million

2. Which regulator sued Coinbase alleging the U.S.’s largest crypto platform violated rules that require it to register as an exchange a day after the same regulator bought an enforcement action against Binance and its founder?

a. European Securities and Markets Authority

b. Commodity Futures Trading Commission

c. Securities and Exchange Commission

d. Financial Conduct Authority

3. Which technology venture capital firm is splitting its U.S., China, and India businesses into three independent firms as the company comes under increasing pressure from Washington officials over its China business?

a. Kleiner Perkins

b. Sequoia Capital

c. Tiger Global Management

d. Accel

4. What is the name of the upstart that holds the golf-related business of Saudi Arabia’s sovereign-wealth fund that will merge with the PGA Tour and the DP World Tour into a new for-profit entity?

a. LIV Golf

b. KSA Golf

c. SAU Golf

d. Saudi Golf

5. Which country has reportedly entered into an agreement with Cuba to set up an electronic eavesdropping facility on the island, allowing its intelligence services to intercept U.S. military base communications, and monitor U.S. ship traffic?

a. North Korea

b. Russia

c. Venezuela

d. China

Answers: 1(a); 2(c); 3(b); 4(a); 5 (d)

—Barron’s Staff

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—Newsletter edited by Liz Moyer, Patrick O’Donnell, Rupert Steiner