The Woke Street Journal
Biden’s TV interview fails to quell re-election concerns among lawmakers, donors and strategists-CNBC
“The president is rightfully proud of his record,” said David Axelrod, who served as a senior advisor to former President Barack Obama, after the ABC News interview aired. “But he is dangerously out-of-touch with the concerns people have about his [capacities] moving forward and his standing in this race.”
Market
I am scheduled to be on Bloomberg today at 12:15 to talk about single stock ETFs. Going to be on Wolf_Financial spaces Thursday at 2pm to talk about our new 2x Bitcoin ETFs.
https://x.com/WOLF_Financial/status/1809986104394764594
Probably a perfect jobs number on Friday as far as the market is concerned. Strength this month, but previous month’s revised down. Gives the Fed cover to cut in September but doesn’t signal a recession.
S&P 500 scores record high as jobs data point to cooling ‘but not collapsing’ economy-MarketWatch
“The economy is cooling, but not collapsing,” said Andrew Slimmon, senior portfolio manager for U.S. equities at Morgan Stanley Investment Management, in a phone interview Friday. “The market is not pricing in anything more than a slowdown.”
Speaking of September, if Nickileaks is talking about it, pay attention.
Case for September Rate Cut Builds After Slower Jobs Data-WSJ
Risk assets seemed to like it. The market is starting to look very overbought here. I’ve been adding to shorts as my short watch list eclipses my long one these days. You don’t necessarily want to fight this trend, but I do think having some hedges is prudent. Breadth was not great on Friday, the percent of stocks above their 20 day moving averages ticked down.
As did the advance/decline line.
From Jonathan Krinsky…
In many ways this is an unprecedented market with few parallels. Sure we have seen periods with lopsided breadth (late '90s), optimistic sentiment (late '21) and low-volatility ('17). Yet the current market seems to have all of them, in some cases at extreme levels, and yet nothing seems to break the current cycle. What is clear is that the broadening we saw in late '23 on implied rate cuts is not happening this time around
Earnings Season to Test Investors’ Faith in Big Tech Stocks-WSJ
The growing size of the index’s heavyweights means a lot is riding on their ability to deliver profits and guidance in coming weeks that justify their sky-high valuations.
From Mike "O’Rourke on valuations and multiples..
The current behavior emulates that of Q1 2000. The market becomes comfortable with lofty valuations and then comparisons start. For example, the belief emerges that if Nvidia can trade 43x forward earnings, then the Blue Chips of the past two decades, Apple and Microsoft, should be able to support multiples in excess of 30x forward earnings and still be attractive. Technically, that is true in the short term, but paying high multiples for the largest companies in the stock market historically has not worked well. From 2000 through the end of 2020, Microsoft and Apple had registered median monthly P/E ratios of 20.7x and 19.1x earnings respectively. Last week's rally pushed Microsoft to more than 40x earnings and Apple to more than 35x. The fact remains that neither company is experiencing anywhere near the growth Nvidia has experienced over the past year. Although Nvidia is expected to continue that growth throughout this year, this is a megacap growth phase unlikely to be replicated in the foreseeable future by current public companies, including Nvidia. Thus, as they have done historically, multiples will contract again. As the companies with the lowest multiples in the Mag7, the rallies in Google and Meta Platforms are more understandable. Both companies trade approximately 28x trailing earnings and less than 25x forward earnings.
With an overbought market and continued bad breadth I would continue to look at this thematically. Look to buy dips on anything AI and AI infrastructure related, precious metals, law and order, and Argentina.
This week we have CPI and PPI along with Powell’s testimony to the House and Senate.
Rates continue to move down.
Looks like the 10 year wants to test the lows.
Software won’t quit.
Semi’s are not as strong, but keep moving up, except MU.
Precious and industrial metals continue to be strong.
This could be why. Hedge funds pile into commodity sensitive stocks at fastest pace in five months: Goldman data-MarketWatch
Hedge funds have now reversed course in a buying spree that has seen them plow into the materials and energy sectors via a flurry of long bets on firms in sub-sectors including oil, gas & consumable fuels, energy equipment & services, containers & packaging and mining & metals, the report said.
Silver beat gold, copper — and even the S&P 500 — in the second quarter. What’s next?-MarketWatch
My law and order list (GEO, CXW, SWBI, and AXON) showed some weakness last week. I do think those stocks have more upside if Trump gets re elected and nothing happened last week that was bad for him. I haven’t been trading DJT lately but it seems to be moving in the opposite direction of the polls. If it re tests 25 it may be tempting.
The Argentine names were also weak, still would look to buy them on any dips.
Argentina’s Milei Has a Mixed Record So Far. He Still Needs to Tackle the Peso Problem.-Barron’s
Milei has made remarkable progress on Job No. 1, closing Argentina’s yawning fiscal gap, he argues. The treasury is running its first surplus since 2008, thanks to chainsaw-esque slashes to pensions, subsidies, and revenue sharing with regional governments. Inflation is falling fast, down from 25% monthly last December.
A lot of the energy names were weak on Friday, I would be looking to buy dips in them as well. That includes solar, coal, electric, and nuclear.
Homebuilders are interesting here as they have been declining at the same time as interest rates. This could be telling us something.
Same with the regional banks.
Then you have the big banks. Big Banks Are Taking Hits From Commercial Real Estate-WSJ
The trouble is at big banks and their loans to properties that are intended to be leased to third parties. For CRE loans involving properties that aren’t owner-occupied and are held by banks with over $100 billion in assets, more than 4.4% were delinquent or in nonaccrual status in the first quarter.
Looks double toppy….
ESG
Chevron Reversal Could Affect Appeal of DOL’s ESG Rule-Plan Sponsor
The impact of the U.S. Supreme Court’s decision overturning the longstanding Chevron standard of deference to federal agencies could be on display on Tuesday, July 9, in the appeal to the U.S. 5th Circuit Court of Appeals of a case challenging the Department of Labor’s ESG rule.
The case will become the first concerning environmental, social and governance factors to go before a judge in the post-Chevron era, with plaintiffs in Utah et al. v. Julie Su, Acting Secretary of Labor, arguing that the new Loper Bright decision has direct bearing, while the DOL notes it did not rely on Chevron in its earlier rebuttal, making the June decision irrelevant to the appeal.
Despite growing skepticism among investors, as evidenced by their withdrawal of billions of dollars from ESG equity funds so far in 2024, many finance industry leaders continue to claim that ESG-focused investing produces above-average returns.
But is that true?
Environmental, social and governance (ESG) is a movement designed to pressure businesses and investors to pursue larger social goals. According to ESG theory, firms that receive poor ratings from ESG rating agencies should lose investment dollars. Yet the claim that ESG-focused investing can help investors do well by doing good has received surprisingly little empirical support from academic studies.
However, according to a new study published by the Fraser Institute, which tracked 310 companies listed on the Toronto Stock Exchange from 2013 to 2020, neither ESG rating upgrades nor downgrades were related in a statistically significant way to the stock market performance of companies.
Anti-ESG Surge Pushes Investor Proposals To Record Volume-Law 360
DEI
How DEI Becomes Discrimination-WSJ
Yet there is evidence that many universities have engaged in outright racial preferences under the aegis of DEI. Hundreds of documents that I acquired through public-records requests provide a rare paper trail of universities closely scrutinizing the race of faculty job applicants. The practice not only appears widespread; it is encouraged and funded by the federal government.
Lohmeier publicly spoke out against DEI training because he believed it was dividing the troops and decreasing morale, which affected military readiness. He believes "the DEI industry… is steeped in critical race theory, is rooted in anti-American, Marxist ideology."
Woke Companies
Hence the reason why public companies should be politically neutral. Tractor Supply Is Latest Stock Facing Consumer Backlash. It Likely Won’t Be the Last.-Barron’s
Biden
White House Visitor Logs Show Parkinson’s Expert Met With Biden’s Doc-Daily Wire
Things That Get Blamed For Climate Change
UK’s Election Is a Rare Win Against Anti-Climate Campaigns-Bloomberg
In neighboring France, the far-right National Rally, which has attacked climate policy as part of its pitch to voters, is hoping to build on early successes during the final election round for the country’s parliament this Sunday. In the United States, Republican President Donald Trump, who has denied climate science, is ahead in the polls. Across Europe, an anti-green backlash has cowed climate ambition.
By contrast, Keir Starmer’s Labour has a manifesto that puts climate and clean energy front and center, and in Ed Miliband, an energy secretary with many years’ experience in climate diplomacy. While the UK has long been ahead of the curve in climate progress — it has decarbonized faster than any other G7 country — the incumbent Conservative Party has spent the past year downgrading its once-lofty ambitions.
It’s summer. Businesses would have to give workers rest breaks, shade and water under new Biden rule-MarketWatch
Election
I’m sure this is fine. Wisconsin Supreme Court changes course, will allow expanded use of ballot drop boxes this fall-Breitbart
Conservatives controlled the court at that time, but Janet Protasiewicz’s election victory in April 2023 flipped the court to liberal control. Seeing an opening, Priorities USA, a progressive voter mobilization group, asked the court in February to revisit the decision.
International
This was a surprise yesterday. French Leftist Coalition Prevails Over Le Pen’s Far Right in Election Shock New Popular Front wins the biggest share of the National Assembly but falls far short of a majority, raising the specter of a hung parliament-WSJ
This Trump Supporter Helped Crush the U.K.’s Conservative Party-WSJ
On Friday, Farage was in London celebrating. His upstart party Reform UK had won more than 14% of the total vote in Britain’s election last Thursday on an anti-immigration platform. The 60-year-old, who built a career protesting against the establishment, will now sit in Parliament alongside four other Reform UK lawmakers—his first victory for Parliament in eight attempts.
Hope 2029 isn’t too late. Nigel Farage: Phase Two to Save the Country Starts Now-Breitbart
Now Reform UK has a bridgehead in Parliament, it is time to start the next part of the plan — “professionalising” the party to get it ship-shape ready to challenge the coming elections in 2029.
Awaits ours also. Crushing Debts Await Europe’s New Leaders-WSJ
Public debt is close to multidecade highs on both sides of the English Channel, where voters this week were electing new parliaments. In both France and the U.K., government spending and budget deficits as a share of gross domestic product are significantly above prepandemic levels. Economic growth remains lackluster, borrowing costs have surged, and demands on the public purse are rising, from defense to old-age pensions.
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