The Week Ahead: Jobs Report

1. Hottest News This Week

Retail Sales

📣 Jobs Report

Few U.S. corporations have scheduled events this week due to the midweek Independence Day holiday. However, investors will still receive important economic data, including a key jobs report. With recent inflation reports showing cooling price pressures, Federal Reserve officials will closely monitor Friday's employment report. Central bankers have noted that with improving inflation, keeping an eye on jobs is crucial.

📣 Jerome Powell

Market watchers will focus on remarks from Federal Reserve Chair Jerome Powell and New York Fed President John C. Williams at a European Central Bank conference. On top of this, The Federal Reserve will release the June FOMC meeting minutes on Wednesday.

NOTE: THE STOCK MARKET IS CLOSED ON THURSDAY

2. Matt Allen’s Corner

The Silver Market

In the late 1970s and early 1980s, two wealthy brothers, Nelson Bunker Hunt and William Herbert Hunt, embarked on a bold and ultimately disastrous mission to corner the silver market. The Hunts, sons of the Texas oil tycoon H.L. Hunt, believed that investing in silver would protect their wealth from the ravages of inflation. Beginning in the early 1970s, they started buying massive amounts of silver. By 1979, they controlled a significant portion of the world's silver supply, driving the price from around $6 per ounce to nearly $50 per ounce by January 1980.

Their aggressive buying spree did not go unnoticed. The dramatic rise in silver prices alarmed market regulators, who stepped in to cool the overheated market. The COMEX (Commodity Exchange, Inc.) and the Chicago Board of Trade (CBOT) raised the margin requirements for silver futures, making it more expensive to hold such large positions. This move was a direct hit to the Hunts' strategy, as they had heavily leveraged their investments by borrowing money to buy silver. When the margin requirements increased, the Hunts were forced to sell off their silver holdings to cover their debts.

On March 27, 1980, a day that became known as "Silver Thursday," the price of silver plummeted from its peak to below $11 per ounce. The Hunt brothers faced enormous losses, ultimately leading to their financial ruin and a declaration of bankruptcy. Their attempt to corner the silver market ended in disaster, serving as a stark reminder of the perils of excessive leverage and market manipulation.

The story of the Hunt brothers offers several key lessons for investors. First, borrowing heavily to invest, as the Hunts did, can amplify gains but also magnifies losses when the market turns against you. Second, regulatory bodies can and will intervene to prevent market manipulation, and such actions can have severe consequences for those trying to game the system. Finally, the importance of diversification cannot be overstated; putting too much of one’s wealth into a single asset, as the Hunt brothers did with silver, can lead to catastrophic losses. This cautionary tale highlights that even the wealthiest investors are not immune to the fundamental principles of the market.

Cheers,

Matt Allen

3. Comin’ Up

EARNINGS AND ECONOMIC DATA

💰 Earnings:

Monday: Graphjet

Tuesday: Manchester United

Wednesday: SunPower

Thursday: Market Closed

Friday: N/A

📈 Major Economic Events:

Monday: ISM Manufacturing

Tuesday: Job Openings

Wednesday: ADP Employment

Thursday: Market Closed

Friday: US Employment Report

The author of this newsletter owns ETF’s (exchange traded funds) that may hold ownership interests in the companies discussed in this newsletter as of the published date of this newsletter.