Trump-Musk spat, crash questions for Boeing

Donald Trump’s spat with Elon Musk had started to look like another volatility event in the making but the pair both appear to have cooled their heels over the past week with a more conciliatory tone struck.

Trump wished the Tesla boss ‘well, very well’, after heaping praise on Musk’s Starlink satellites service (owned by Musk company SpaceX), calling it a ‘great service.’

But perhaps the US President has simply found a more productive verbal punchbag, Trump ramping up his attacks on Federal Reserve Chair Jerome Powell, calling him a ‘numbskull’ over the past week and demanding steep rate cuts to ease the $600 billion annual interest bill on US debt.

Now, with inflation cooling faster than expected, rate cuts could be on the Fed’s monetary policy table as soon as September, according to Citi economists, which could load the gun for a new shot higher for tech stocks.

That said, Israel’s attack on Iran is another big unknown thrown into the markets mix. Reports said the US was not involved, but the White House had warned it would consider military measures should nuclear negotiations fail, with a key response deadline ending 12 June. Iran has threatened a response.

On the stock front, shares in Oracle surged to record highs after the cloud computing group lifted its annual revenue growth target and highlighted solid demand from clients aiming to harness AI (artificial intelligence). More on this later.

Meanwhile, aircraft maker Boeing saw its stock price slump after an Air India plane – reported to be a 787-8 Dreamliner – crashed minutes after taking off from India’s western city of Ahmedabad, with 242 people on board. More than 200 people are feared dead.

GE Aerospace, whose GEnx-1B engines power the 787 Dreamliner, also fell sharply.

Oracle

Shares has previously pondered why markets have been slow to pick up on Oracle’s cloud computing growth opportunity, the datacentre servers it rents to customers, but perhaps investors are now starting to catch on.

The firm’s cloud revenues surged 50% in the fiscal year ended 31 May, and Oracle expects it to jump 70% in the current financial year, as the company put up what CEO Safra Catz called ‘dramatically higher’ revenue growth rates.

Those growth rates are sensational compared to those of Oracle competitors like Amazon Web Services, which saw its revenue increase 19% in 2024. But Oracle remains a pipsqueak in cloud computing, with only about a tenth of AWS’ annual revenue.

Another takeaway from the Oracle earnings report is that Larry Ellison, the company’s chair and chief technology officer, has not lost his capacity for hyperbole and self-promotion at the age of 80.

‘We will build and operate more cloud infrastructure datacentres than all of our cloud infrastructure competitors combined’, Ellison boasted on an investor call. Unsurprisingly, Ellison didn’t put a time frame on when that might transpire.

Warner Bros Discovery

Films and TV giant Warner Bros Discovery plans to split its business as the media firm grapples with the rapid changes in how people watch entertainment.

Separating its TV studios and streaming businesses will, according to CEO David Zaslav, bring a ‘sharper focus’ and ‘strategic flexibility’ to a business that has been struggling for years. Crucially, the plan is also promised to boost shareholder returns, which have been dismal, -11% a year for a decade, according to Morningstar data.

It all sounds a bit desperate, but the markets sort of liked it, the stock rallying over the past week, although not by much.

Last year, rival Comcast announced a similar move, spinning off its television networks, including CNBC and MSNBC into a separate operation, but the pressure is mounting as modern streaming services like Netflix, Amazon’s Prime and Apple TV turn the screws.

JM Smucker

Packaged foods manufacturer JM Smucker received a right good smacking from investors after serving up (10 June) a fourth-quarter sales miss, driven by weak demand for its dog snacks and sweet baked goods, and delivering soft profit guidance amid tariff-related costs.

Shares in the Ohio-headquartered coffee, peanut butter and pet food maker slumped 14% to a five-year low of $95.8 after Q4 sales fell 3% to $2.14 billion. That was shy of the $2.19 billion Wall Street was looking for with top line progress pegged back by declines in pet foods, baked snacks and the US spreads business.

One stiff headwind facing JM Smucker, which digested Twinkies maker Hostess Brands in 2023, is having to pass on the soaring cost of coffee mainly imported from Brazil and Vietnam.

Full-year 2026 sales growth guidance in the 2% to 4% range left a sour taste with investors, as did a lowered long-term growth outlook for the acquired Hostess business leading to another chunky write-down. In addition, JM Smucker’s annual forecast earnings per share of between $8.50 and $9.50 came in below the $10.26 analysts were looking for.