The Woke Street Journal
I will be on the Schwab Network at 3:15 PM today talking about the market
Market
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
Woke Companies
‘Go Woke, go broke’ is the true slogan of The Washington Post-NY Post
As I point out in my soon-to-be released book titled, fittingly, “Go Woke, Go Broke,” businesses that channel left-wing dogma — think Budweiser, Target, Disney, all those floundering legacy media companies — have suffered the consequences of American consumers who don’t like to virtue-signal when they drink beer, buy clothing or watch the news.
The Washington Post went there as well.
Sure. Google Claims Conservative Content Booted From Play Store In Error-Daily Wire
Conservative media organization PragerU was kicked off of the Google Play store on Friday shortly after it released its documentary “Dear Infidels: A Warning to America,” but the Big Tech company said the suspension was a mistake.
Politics
Breaking: “Juror’s Cousin” Celebrated Trump Conviction on Facebook Before Verdict Announcement-Valuetainment
New York Judge Juan Merchan sent a letter to all parties involved in former President Donald Trump’s hush money case on Friday, notifying them of a comment on the court system’s Facebook page that seemed to suggest knowledge of the verdict the day before it was announced.
From Jefferies about the EU parliamentary elections…
EU parliamentary elections this weekend showed a strong performance from Far right parties. The center parties still have the majority in the parliament, hence we do not expect any major shifts in policy. However, three areas where we could see some shifts would be net zero policies, immigration and the support for Ukraine. Macron called for French elections which would be negative for French spreads as a right wing majority in the Parliamentary would hamper any reform plans. The deficit picture in France is already weak and this would further add to market concerns. We have been short France over the last few months and remain with our bearish stance,
DEI
DEI Programs Could Soon Face Supreme Court-Zero Hedge
The American Alliance for Equal Rights (AAER) filed a lawsuit against Fearless Fund in 2023, arguing that the black-only and women-only grant program was discriminatory. The group initially tried to have the program halted while the case played out in the courts, but a district judge ruled in favor of the company and allowed the program to continue.
Then, on Monday, a three-judge panel in the U.S. Court of Appeals for the 11th Circuit overturned the district judge’s ruling, thus ordering Fearless Fund to cease its grant program. The two judges in the majority were appointed by former President Donald Trump, while the lone dissenter was an Obama appointee.
DEI is unraveling at our universities. Good riddance to a failed and divisive bureaucracy.-USA Today
It’s worth questioning what is motivating so many young people to embrace such blatant antisemitism – earning them the praise of actual terrorists.
One of the common denominators seems to be the ideology of “diversity, equity and inclusion” that has become increasingly entrenched in higher education.
Things That Get Blamed For Climate Change
Gov. Gavin Newsom wants to spread his anti-fossil fuel gospel far beyond California, but last week he lost a follower. Virginia canceled its plan to adopt West Coast vehicle standards, offering drivers freedom instead of climate dogma.
Woke
Border
The Washington Examiner obtained the memo that Border Patrol agents were given by Biden officials which comes immediately after Biden signed a weak executive order on immigration last week that he claimed would shut down the border if it became overwhelmed — even though he had previously said that he couldn’t do it. Numerous officials, elected leaders, and security experts have warned that Biden’s executive order solves nothing and is little more than window dressing.
Israel/Gaza
The non-surprise is that professional anti-Israel voices, United Nations officials and the European Union foreign-policy chief rushed to attack Israel. Egypt condemned the operation “in the strongest terms.” How dare Israel rescue its own citizens. Didn’t it know there would be casualties? The BBC asked whether Israel gave a warning that the rescue raid was coming. Seriously? A tip-off to terrorists? Perhaps read them Miranda rights too.
Pro-Palestinian Protesters Vandalize Statues Outside White House During Massive Protest-Daily Caller
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