What to know today

  • The Fed: Sooner vs. Later.
  • I said “Shein,” she said “Shein.”
  • Check in with Granddad and Grandma
markets

Nvidia Is Not “The Market”

And Fed credibility on employment is important too.

That’s a sharp move down and to the right for Nvidia $NVDA, about 15 percent in just three days and sufficient to qualify it as an “official” correction.

NVDA shed more than $500 billion in market capitalization since Thursday and fell out of the exclusive $3 trillion club.

Insiders are selling at the fastest pace in years. But daily retail inflow is still spiking in the aftermath of the chip maker’s first-quarter earnings release.

It’s a compelling backdrop for the company’s annual shareholder meeting on Thursday at 12:00 p.m. ET.

Nvidia $NVDA has shed approximately $500 billion in market capitalization since June 20, 2024.

The major equity indexes were mixed again, the Dow Jones Industrial Average going green while NVDA anchored the S&P 500 and the Nasdaq Composite in the red.

It’s the S&P 500’s worst single-day performance this month: a 0.31 percent decline.

It’s wild how boring that is, as Ritholtz Wealth Management chief market strategist Callie Cox pointed out in a pretty insightful X post on Monday morning.

“It is SO boring out there, folks. Like the most boring it's been in approximately 50 years. The S&P 500's worst day this month has been -0.25%,” Cox noted.

“The index hasn't had a month in which its worst day was -0.25% or better since August 1965.” The data are no doubt a little bit different for “worst day was -0.31% or better,” but probably not much.

Generally speaking, for markets as well as the economy, things are trending fine. And there are catalysts and/or contingencies in the works for further upside and to contain any cracks.

Mish Schneider gets specific in her Weekly Market Outlook with another Economic Modern Family reunion.  

We know at least one high-level monetary policy maker is now focusing on the employment situation as the Federal Reserve continues to consider incoming data and the appropriate level for its benchmark interest rate.

Federal Reserve Bank of Chicago President Austan Goolsbee said in an interview with Steve Liesman of CNBC Monday morning that he’s “closet optimistic that we’re going to see improvement” with incoming inflation data.

Goolsbee also said he’s hopeful the Fed will have "a little bit more confidence” inflation-side pressures are coming down after being higher than expected at the start of the year.

He didn’t say anything about September. But he did say central bankers have to think about whether a federal funds target range of 5.25 percent to 5.50 percent is still appropriate.

Beyond inflation, Goolsbee said, there are more and more signs the economy is cooling. He suggested the present level is appropriate when “you're trying to guard against overheating.”

The four-week moving average for initial claims for unemployment insurance is at its highest level since September.

"If unemployment claims are going up, the unemployment rate is inching up, many of the other measures have cooled down to something like what they were before the pandemic and you start to see weakness on consumer spending" the Fed must consider the balance between its inflation and its employment mandates.

“If you're going to be extra restrictive for too long,” Goolsbee explained, “you're going to have to start worrying about what's happening to the real economy.

“It is worth wondering about where we are on our restrictiveness scale,” Goolsbee said.

There’s some sooner-rather-than-later rate cut smoke here.

deep dive

A Dispatch From the Fast Fashion Front

An IPO will drop in London.

I had only the vaguest idea of “Shein” this morning, I confess.

But I have two daughters, the younger of whom is still hanging out under our roof until her job starts later this summer.

And I love when she cures my ignorance of new stuff.

The China-based fast fashion retailer is here to compete for attention and dollars with names more recognizable to young and old alike.

That includes Macy’s $M, TJ Maxx $TJX, and The Gap $GPS as well as Target $TGT, Walmart $WMT, and Amazon.com $AMZN.

Shein – “It’s pronounced ‘SHE-IN,’ not SHINE or SHEEN,” according to my daughter and confirmed by Shein’s X account – is poised to compete well.

But US interests want no part of its initial public offering.

And I’m actually pretty well read on the geopolitical, economic, and ethical underpinnings of opposition that’s driven Shein to the London Stock Exchange.

Reuters reported that China-based fast-fashion retailer Shein has filed for an initial public offering on the London Stock Exchange.

Shein’s latest fundraising round valued it at approximately $66 billion. Reuters reported that it filed earlier this month to go public later this year.

Shein initially filed for an IPO in the US in November. It faced a lot of resistance, including rejection of its application for membership in the National Retail Federation, the industry’s largest trade association.

At the same time, US lawmakers have questioned the company’s labor practices and the sustainability of its supply chain.

There is also the very fact of its business model: Shein is at its most basic level a tariff workaround with cheap prices and clever marketing.

It’s growing, though, and fast.

Red tape in the United Kingdom as well as in China will prevent an imminent London listing.

But it’s coming.

Are you buying?

deep dive |
June 25, 2024

A Dispatch From the Fast Fashion Front

WEEKLY MARKET OUTLOOK

The Grandparents Are Getting On Fine

IWM and XRT look well, all things considered.

As Mish Schneider notes at the top of her Weekly Market Outlook, it’s the last week of the last month of the second quarter of the year.

We’re just about halfway through 2024.

Technical analysts are excited about this Friday not so much because it’s PCE Day but because they get a fresh batch of monthly candlesticks at the quarter’s end too.

That’s a lot of really good data.

Early in what promises to be another interesting week, Mish remains focused on her Economic Modern Family.

The iShares Russell 2000 ETF $IWM is the “Granddad” in Mish Schneider’s Economic Modern Family.

That’s Mish’s indicative group of indexes and ETFs that’s “just been kick-ass for really predicting what's happening or where money's rotating.”

Leading off this week is the iShares Russell 2000 ETF $IWM – “Granddad” in Mish’s Family.

The Russell 2000 is made up of small companies that manufacture and distribute goods and services.

According to Mish, it’s also a leading indicator for how much underlying strength and durability there is below the three major US indexes.

IWM is looking pretty good at these levels.

“So we're actually heading back into an unconfirmed bullish phase in the small caps,” Mish observes. “We're not quite exactly outperforming the SPY yet, but that would be something we'd be looking for in the leadership.”

IWM made a nice move on Monday, posting a 0.42 percent gain as the SPDR S&P 500 ETF Trust $SPY was sliding 0.34 percent.

If that move is real it’ll hold up above 200 and maybe start moving through 205, 206. “We get through 210, we have a whole new ballgame,” Mish says.

The SPDR S&P Retail ETF $XRT is the “Grandma” in Mish Schneider’s Economic Modern Family.

Mish’s next chart up is of course Granddad’s wife – the SPDR S&P Retail ETF $XRT is Grandma.

Grandma controls the family budget: “As a measure of the US economy and consumer confidence, the brick-and-mortar retail sector has to keep up with the indices for sustained rallies.”

It’s not doing badly, but it is underperforming other sectors such as technology.

It too made a nice little move today, rising 0.78 percent and outperforming SPY.

Mish cautions that “one day does not a rotation make” (and sector rotation is the lifeblood of bull markets, as technical analysts often say).

But we know what we have to keep our eyes on.

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