Wall Street Lunch: Musk To Ban IPhones At Work?

Summary:

• Elon Musk criticizes Apple’s security measures, announces visitors must check their Apple devices at the door.
• Morgan Stanley believes Google’s core business is safe, Apple’s new AI products have limited capabilities but potential for expansion.
• Check out Hazeltree’s report on the most-shorted large-cap stocks in May.

Listen below or on the go on Apple Podcasts and Spotify

Elon Musk calls Apple’s AI plans a security violation. (0:16) Strategist warns hot CPI could tank risk assets. (1:46) Ford named top auto sector pick. (3:08)

This is an abridged transcript of the podcast.

Our top story so far. Just as sure as Dan Smith Will Teach You Guitar, Elon Musk will take your iPhone. (That’s a little in-joke for our New York listeners.)

Musk took aim at Apple after its WWDC keynote, firing off a host of tweets. The Tesla (TSLA) chief said he would ban Apple devices at all his companies if the iPhone maker integrated OpenAI at an OS level.

“That is an unacceptable security violation,” he said, adding, “Visitors will have to check their Apple devices at the door, where they will be stored in a Faraday cage.”

Apple has announced a slew of AI-centric updates to its operating systems. It also announced a partnership with Microsoft-backed OpenAI to integrate ChatGPT into experiences within iOS, iPadOS, macOS, and Siri. The popular chatbot will be available for free later this year and will be integrated into Apple’s systemwide writing tools.

OpenAI said: “Privacy protections are built in when accessing ChatGPT within Siri and Writing Tools; requests are not stored by OpenAI, and users’ IP addresses are obscured.”

Also in the AI arena, Morgan Stanley says Apple Intelligence is unlikely to be disruptive to “broad-based search,” which cements its belief that Google’s (GOOG) (GOOGL) core business is safe for the time being.

Analyst Brian Nowak says: “For now, we see the new Siri and Apple Intelligence products as a native AAPL assistant with still limited capabilities… though the OpenAI partnership will help AAPL scale Siri’s responses to deliver answers to questions that fall outside of AAPL’s iOS ecosystem, and API integrations represent the potential to expand functionality to (third-party) apps.”

In today’s trading. The Dow (DJI) is lagging the S&P (SP500) and Nasdaq (COMP.IND), dragged down by price moves in financial components.

Traders have been playing it pretty close to the vest this week, but that will change tomorrow with the CPI out premarket and the Fed later in the day.

Andrew Tyler, head of J.P. Morgan’s U.S. Market Intelligence, says the options market is expecting the S&P 500 to move by around 1.3–1.4% “in either direction” by Friday, based on the price of at-the-money straddles that expire that day.

He told clients that “with CPI and Fed on the same day, there is a possibility of a CPI outcome being reversed by Powell’s press conference.”

Tyler says if month-over-month core CPI surpasses 0.4%, then a selloff would be triggered across all risk assets, and the S&P 500 would fall between 1.5 and 2.5%. But he only sees a 5% chance of that happening.

Moving to active stocks. Southwest Airlines (LUV) reiterated its willingness to meet with Elliott Investment Management to further discuss the airline’s strategy to enhance value for all shareholders.

Jefferies says that Elliott Management’s near-term focus is leadership, replacing CEO Bob Jordan with an outsider willing to deviate from the status quo, and establishing a new, independent board of directors.

Morgan Stanley named Ford (F) as its top pick in the U.S. auto sector. A crucial part of the firm’s bullish thesis is that analyst Adam Jonas believes that Ford is demonstrating an increasing understanding that its current electric vehicle strategies have to change materially. Ford is also expected to dial back vertical integration in favor of partnership and cooperation, including with Chinese firms.

Also in the auto sector, General Motors (GM) announced that its Board of Directors has authorized a stock buyback program of up to $6 billion.

And Oppenheimer raised its price target on Nvidia’s (NVDA) stock to $150 from $110 after the split.

Analyst Rick Schafer, who has an Outperform rating, noted that they were updating their model to reflect the increased number of shares and using the opportunity to publish 2026 estimates for the first time.

In other news of note. The Supreme Court asked the Biden administration to weigh in on an attempt by oil companies to scuttle a lawsuit by the city of Honolulu. The lawsuit accuses them of deceiving the public for decades about the dangers of climate change caused by the burning of fossil fuels.

The U.S. Solicitor General was invited to file a brief outlining the administration’s views on whether a challenge to the city’s lawsuit should be taken up by the Court.

A group of major oil companies, including BHP (BHP), BP (BP), Chevron (CVX), ConocoPhillips (COP), Exxon Mobil (XOM), Marathon Petroleum (MPC), Shell (SHEL), and Sunoco (NYSE:SUN), were among the companies asking the Supreme Court to consider the case after Hawaii’s Supreme Court ruled in October that the lawsuit could proceed.

In their request for review, the companies argued the U.S. Clean Air Act puts claims of broad environmental impacts under the federal court system and precludes individual states and local governments from filing their own lawsuits.

Attorneys for Honolulu say its claims of the companies’ “deceptive” commercial practices “fall squarely within the core interests and historic powers of the states.”

And in the Wall Street Research Corner. Data and tech firm Hazeltree is out with its report on the most-shorted large-cap stocks in May. Tesla is back in the top position with a 99 on the Hazeltree Crowdedness Score, which represents securities that are being shorted by the highest percentage of funds in Hazeltree’s community.

Chevron (CVX) dropped to the third spot below Microchip Technology (MCHP). Rounding out the top five are AMD (AMD) and Charter Communications (CHTR).

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