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Breaking news the U.S. labour market is strong. Payrolls rose 339,000 in May, beating expectations of 180,000.
This isn’t what Jerome Powell wanted to see.
🤝 The debt ceiling bill made has made it through the US Senate.
In uncharacteristically quick and bipartisan deliberations, members voted to pass the deal in a 63-36 vote.
The bill now heads to President Biden’s desk where his signature will close the curtain on this latest episode of the Washington political circus.
Next week, however, will feature a spin-off side show brought to us by the House Freedom Caucus (ultra-conservatives) which will meet to discuss next steps, including the possible ousting of House Speaker McCarthy.
👷🏼 We got updated labor market data yesterday ahead of this morning’s all-important employment report—here’s the rundown:
Private businesses in the US created 278,000 jobs in March, well above estimates of 180,000.
Wage growth slowed, but remains strong at +6.5% YoY (previous 6.7%).
Initial jobless claims for last week totaled 232,000 which was up from the previous week but slightly below market expectations.
US employers announced just over 80,000 job cuts in May, a 20% increase over the prior month and 287% higher than the same month a year ago.
🏭 The ISM Manufacturing PMI fell to 46.9 in May from 47.1 in April.
This was slightly below market expectations of 47 and marked the 7th straight month of contraction for the sector.
Beneath the headline number were some positive signs: employment increased to its highest since August while prices paid dropped sharply into contraction, falling to 44.2 from last month’s 53.2.
On the other hand, new orders—which are a leading indicator of future activity—sank to their lowest in 4 months.
🥽 Meta Platforms has announced the release of its new mixed-reality headset.
Available in the fall, Quest 3 will cost $499 and feature a thinner design, enhanced cameras, and “high-res color mixed reality”.
The announcement comes just as Apple gears up for the launch of its first-ever VR headset at its Worldwide Developers Conference on Monday.
As an aside: Meta’s Reality Labs unit posted a $3.99 billion operating loss in Q1.
📉 As juicy as semiconductor stocks may look to potential short sellers, bets against them so far this year have not paid off.
According to S3 Partners, traders have lost 92% of every dollar they’ve bet against chipmakers this year.
That puts YTD paper losses for semis short sellers at more than $18 billion.
Not surprisingly, the bulk of the losses has come at the hands of Nvidia, with shorts losing $8.6 billion this year betting against the stock.
Even so, they’re not going down without a fight: traders piled on an additional ~$1.4 billion in shorts against the sector over the last 30 days.
📈 Buzz over AI has sparked a flurry of buying over the past weeks, particularly in tech stocks–here’s a look at the flows data:
Tech funds saw a record $8.5 billion inflow for the week ending May 31.
About $13.3 billion flowed into US equity funds.
Global equity funds saw inflows of $14.8 billion.
Bond fund inflows totaled $1.1 billion.
Cash funds saw their 6th straight week of inflows at $11.2 billion for the week.
A $31.7 billion inflow pushed money market funds to a new record high of $5.42 trillion.
🛢️ As the OPEC+ meeting draws closer, experts are not expecting the group to cut production levels.
What they are expecting, however, is the potential for cuts in the second half of the year should prices remain below $80 per barrel.
In the meantime, money managers are continuing to bet on lower prices.
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📊 Yesterday’s highlights:
Lululemon: $2.28 EPS (vs. $1.98 expected) ✅, $2 billion in sales (vs. $1.93B expected) ✅.
Earnings grew 54% YoY on annual sales growth of 24%, including a 79% increase in revenue from China.
The company raised its full-year guidance for both profits and revenue above Wall Street’s expectations.
Dollar General: $2.34 EPS (vs. $2.38 expected) ❌, $9.34 billion in sales (vs. $9.46B expected) ❌.
Same-store sales grew at just half the pace analysts expected and was driven by lower-margin consumables.
The company cut its full-year outlook for sales, including a decline in same-store sales which were previously expected to show growth.
It’s also reducing the number of new Popshelf stores expects to open in 2023 to 90 from 150.
Earnings manipulation: As business slows, more companies are using nontraditional earnings metrics and accounting practices to beat estimates.
AI boom: Bloomberg Intelligence predicts the generative AI market could reach $1.3 trillion by 2032.
PSA: Jim Cramer is advising investors to stick with the “Magnificent Seven” stocks.
Twitter loss: The social media platform’s head of trust and safety, Ella Irwin, has resigned after Elon Musk publicly criticized a content moderation decision.
Apple Savings: Some customers of Apple’s new savings product have reported difficulties withdrawing their money from Goldman Sachs.
Payment apps: The Consumer Financial Protection Bureau is warning that money stored in apps like Venmo, Cash App, and Zelle is more vulnerable than bank deposits.
Fed talk: Philadelphia Fed President Patrick Harker thinks the FOMC should “at least skip” a rate hike in June.
US productivity: The annual productivity rate of American workers has been negative for a record 5 straight quarters.
Binance decline: Binance has lost ~25% of its market share over the past 3 months thanks to increased regulatory scrutiny and competition.
Rules overhaul: The CFTC has proposed updating its risk management rules to account for risks associated with crypto and digital assets.
Liquidation: Silvergate Bank will file a self-liquidation plan with California regulators within 10 days.
USDT ATH: Tether’s market cap made a new all-time high, reaching $83.23 billion.
COIN offering: Coinbase will introduce Bitcoin and Ether futures for institutional clients starting next week.
Check out GritCRYPTO for more.
Nuclear consolidation: The largest US nuclear operator, Constellation Energy, will acquire NRG Energy’s 44% stake in the South Texas Project for $1.75 billion.
AI computing: Microsoft has signed a deal with Nvidia-backed startup CoreWeave for AI computing power that could be worth billions over multiple years.
Vet takeout: Swedish buyout firm EQT will buy veterinary drugmaker Dechra Pharmaceutical for $5.6 billion in Europe’s biggest takeout of the year.
Military satellites: SpaceX has won a Pentagon contract to provide satellite internet services to Ukraine’s military.
SPAC suits: Dozens of investor lawsuits have dragged SPAC operators like Chamath Palihapitiya into court to face litigation
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