What to make of Apple's developers conference and a potential winner from U.S.-China trade talks
(This is a wrap-up of the key money moving discussions on CNBC's "Worldwide Exchange" exclusive for PRO subscribers. Worldwide Exchange airs at 5 a.m. ET each day.) Investors are looking for opportunities in defense stocks. They also search for opportunities in China, as trade talks with the U.S. continue. Worldwide Exchange pick: RTX Kevin Mahn of Hennion & Walsh Asset Management said RTX is his top pick in the aerospace and defense sector. "Last year we saw nearly a10% increase to defense spending across the globe, to $2.7 trillion the largest annual increase since the Cold War," Mahn said. "RTX operates out of three segments: Collins Aerospace, Pratt and Whitney and Raytheon. Raytheon is the most attractive from an investment standpoint, they produce and distribute air defense systems think the 'Iron Dome'," said Walsh. Bank of America released research Tuesday estimating an additional $370 billion of spending in 2025 if all members of NATO spending 3.5% of 2024 GDP on defense. Worldwide Exchange pick: Alibaba Kevin Carter of the EMQQ Global believes Alibaba will see the biggest benefit from U.S.-China trade talks out of all the Chinese companies, partly because of its U.S. listing. "The tariffs themselves aren't going to change much in the Alibaba world, but it's China going from un-investable to investable again. … The vast majority of investors, they've been scared of China for different reasons. But I think you have a lot of room for multiple expansion if fear about the US-China relationship gets put aside," Carter said to CNBC. He added: "The state of the Chinese consumer is important, and so to the extent that the Chinese consumer does better because of a trade deal or feels more comfortable spending because of a trade deal they'll benefit that way too." Alibaba missed revenue and earnings expectations when it reported in May. A major factor was softening consumer sentiment in China . MoffettNathanson on Apple and WWDC Clay Griffin of MoffettNathanson maintained his $141 price target and sell rating on Apple after the company's WorldWide Developers Conference, where he believes the iPhone maker met low expectations related to announcements or AI developments. Griffin emphasizes that Apple is still facing a number of headwinds he describes as "death by a thousand paper cuts." "The tariffs, the response from China, Apple's position in China. … The App store ruling in the Epic case, the Digital Markets Act in Europe. There is a parade of not existential threats by any means, but meaningful risk to Apple's business," said Griffin. According to FactSet, the consensus price target for Apple is $228 with an overweight rating. Market implications for CPI Kevin Simpson of Capital Wealth Planning said the CPI report on Wednesday is the biggest market event of the week, even with U.S.-China trade talks. "We saw the jobs report last week on Friday, which was terrific. If you can get this inflation number closer to their 2% target that is going to give them the ability to cut rates later this year for the right reason not because they are trying to re-stimulate growth but because they are really too restrictive," Simpson said. Simpson added a US-China deal still has market implications especially if their can be a final agreement on a reduction to tariffs. "Even if we are at 10% tariffs which it seems like the market is expecting and the consensus is we can tolerate that … I look at tariffs being inflationary, even it's temporary inflation… that's not great for the market."
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