Financial News vs. Noise
I will be on the Schwab Network at 3:15 PM today talking about the market
Hotter than expected jobs number on Friday, but was it really?
In the latest shocker, the Labor Department reported on Friday that the U.S. added 272,000 jobs in May, up from 165,000 in April and much higher than economists’ expectations. The strong reading is especially perplexing because it comes on the heels of a string of weak economic reports in recent weeks, including soft income and spending data for the month of April and a lower-than-expected reading on manufacturing sentiment in May.
Herein lies the problem. We keep seeing strong economic numbers like jobs on Friday, yet Biden’s favorability numbers suck and his administrations pleadings about how he isn’t getting enough credit for a strong economy seem to fall on deaf ears. The rich are fine, and always will be, the average consumer out there is not. Does this filter into the market at some point?
Maybe the recession is here and we just don’t know it yet? Why the Recession Still Isn’t Here It’s the expansion that keeps defying expectations, thanks to steady hiring and strong spending. But don’t get too comfortable.-WSJ
On the other hand, low-income consumers have depleted pandemic-era savings cushions and have turned to borrowing on credit cards. They’re falling behind on payments at higher rates, and discount retailers are reporting that demand is weakening.
Big data week this week. We have CPI and FOMC on Wednesday and PPI on Thursday. We also have a couple of bond auctions.
Breadth continues to be awful and can be seen somewhat in % of stocks trading above their 20 day moving average on the S&P.
As it should. Three stocks now account for 20% of the S&P 500’s value. That’s making some investors nervous.-MarketWatch
For the first time dating back to at least 2000, three U.S. stocks — Microsoft Corp. , Nvidia Corp. and Apple Inc. — account for more than 20% of the value of the S&P 500, Dow Jones Market Data show.
This is big today. Apple Is Under Pressure to Deliver on AI at Monday’s WWDC Event-WSJ
At its Worldwide Developers Conference, which begins at 1 p.m. ET and will run throughout the week, the company is expected to announce a raft of new AI features. Those include message-writing assistance, photo editing and text summarization, as well as a boost in capabilities for voice assistant Siri. Apple is also expected to strike one or more partnerships for more advanced AI capabilities, such as with OpenAI’s ChatGPT, according to people familiar with the matter.
Beneath the Calm Market, Stocks Are Going Haywire -WSJ
The implied dispersion of stocks within the S&P over the next 30 days is at its highest since data began in 2014 compared with the VIX, according to Cboe’s dispersion index. Stocks have moved around far more in the past, but only because the market as a whole was moving around more.
This ought to be a great environment for good stock pickers. Active fund managers make this claim almost every year, and are almost always wrong. But when individual stocks move a lot and the index doesn’t, it is actually true that there are bigger rewards for those who get it right.
I love the sentence “This ought to be a great environment for good stock pickers. Active fund managers make this claim almost every year, and are almost always wrong. “ It is correct, this ought to be a great time for stock pickers, but for most, unless you just have a ton of NVDA, it probably isn’t. Personally, I own NVDA, but just about everything else I own has a down 5+% day in here somewhere.
So coming into a week full of data the question becomes does the S&P continue to make new highs? Does it take the rest of the stocks with it? Or does the weakness beneath the surface mean something?
NVDA has their 10-1 stock split today. Will be interesting to see whether we have a buy the rumor sell the news or the lower stock price brings more people in.
What has to happen for ARK’s predictions to make sense? ‘AI now has to play out elsewhere,’ for Nvidia’s valuation to make sense, ARK’s Cathie Wood says-MarketWatch
One of the most interesting moves from Friday was in gold and miners. News hit that China halted gold buying and anything gold got crushed. One of the benefits of buying dips and selling rips was that because miners ripped Thursday I was short GDX and out of a lot of my exposure, but not all of it.
I did cover my short and added a bunch of exposure into the close. Gold is getting harder to find as miners struggle to excavate more, World Gold Council says-CNBC.com
Interest rates spiked on the “stronger” than expected jobs report, which is interesting coming into FOMC.
Market backs off on hopes for interest rate cuts following strong jobs report-CNBC.com
Pricing in fed funds futures pointed to almost no chance of a reduction at either the Federal Open Market Committee’s meeting next week or on July 30-31. From there, pricing indicates about a 50-50 chance of a September move, and only about a 46% probability that the Fed will follow up with a second cut before the end of the year, according to the CME Group’s FedWatch measure Friday afternoon.
All of those probabilities were down sharply from Thursday levels.
I got short TLT a bit early, but it paid off Friday. We flipped back long at the close.
This morning we are seeing weakness in Europe spread to the US. I don’t think this is a big deal. Euro slides, French stocks slump as EU elections lead to turmoil-MarketWatch
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