Wait Till This Wednesday

MARKETS

As the Incoming Data Turns

The Fed’s job is almost comically complicated.

This is as succinct a summary of the employment situation as you’ll read, courtesy of Sam Goldfarb of The Wall Street Journal:

U.S. job growth burst past expectations last month even as the unemployment rate edged up to 4%, presenting a mixed view of a labor market that has generally been cooling while staying hotter than many anticipated.

The labor market is “cooling,” and the labor market is also “hotter than many anticipated.”
And in between is the Federal Reserve.
The unemployment rate ticked up to 4 percent in May from 3.9 percent in April, and the employment-to-population ratio dipped to 60.1 percent.
It’s the first time the unemployment rate has been at 4 percent in more than two years; it’s risen from 3.4 percent in April 2023.
But the US economy added 272,000 jobs last month, beating a consensus forecast of 185,000. And average hourly earnings were up 4.1 percent year over year, also exceeding expectations.

A stronger-than-expected May nonfarm payrolls report has traders repricing their rate-cut forecasts.

There’s nothing of note on the economic release calendar today, so there’s no new incoming data to process. On Tuesday we’ll see a sentiment reading from the National Federation of Independent Business.
Then it’s Big Wednesday.
The Bureau of Labor Statistics will release Consumer Price Index data for May at 8:30 a.m. ET. The consensus sees headline CPI easing to 0.1 percent from 0.3 percent month over month and steady at 3.4 percent year over year.
Core CPI, which excludes food and energy prices, was steady at 0.3 percent month over month. Core CPI ticked down to 3.5 percent from 3.6 percent year over year.
And at 2:00 p.m. the quiet period will break and we’ll hear from the Federal Open Market Committee.
Nobody expects the Fed to make any meaningful move this week. We may hear things in the official policy statement, and we’ll get excited about the new dot plot.
But all of it will be a variation of “we continue to monitor the incoming data.”

DEEP DIVE

Some Kind of Split

NVDA just got a lot cheaper-looking.

Nvidia $NVDA closed last week at $1,208.88, down 0.09 percent on Friday. It hit a new all-time high of $1,255.87 intraday on Thursday.
When the official session opens at 9:30 a.m. ET today Nvidia $NVDA will be trading at about $121.
Do not be alarmed: NVDA has split on a 10-for-1 basis. That means there are 10 times as many shares trading.
And is market capitalization is still $2.974 trillion, and it’s closing on Microsoft $MSFT, fast.

Nvidia $NVDA will begin trading on Monday, June 10, 2024, on a 10-for-1 split-adjusted basis.

Research from Bank of America indicates that share splits are positive for publicly traded companies. Share prices of companies that split are up an average of 25 percent a year later versus an average return of 12 percent for the broader market.
It’s a matter of making what looks like an expensive stock appear to be cheaper, and it has a clear effect on demand.
NVDA’s split could also make it more attractive to the people who decide what goes in and what comes out of the Dow Jones Industrial Average, a price-weighted index of 30 stocks.
That’d be good for NVDA too, as it would drive demand from mutual funds and exchange-traded funds that track the Dow.

cryptocurrency

Bitcoin $100,000, Maybe $150,000

It’s all about what happens in November.

It’s all about what happens in November.The presidential election-year cycle is one of the better-known trends known to those who use technical analysis to track and follow price action.
We happen to be entering the best three-month period of the year within that construct.
During election years, June to August is the strongest three-month period, with the S&P 500 up 75 percent of the time and generating an average return of 7.3 percent since 1928.
From the Research Desk, we hear that we should prepare for a different type of presidential/political effect.

June, July, and August are historically the best three months of an election year.

Standard Chartered says Bitcoin $BTC could more than double from here if Donald J. Trump retakes the White House.
BTC was trading near $69,360 early Sunday, within 6.4 percent of its March 14 all-time high of $73,798.
The bank expects a second Trump administration to be more friendly to cryptocurrency than the Biden administration has been so far.
The US Securities and Exchange Commission approved trading in spot BTC exchange-traded funds on January 10, 2024.
That approval catalyzed a major rally for the world’s No. 1 cryptocurrency, which has rallied more than 64 percent so far this year.

BTC was trading near $69,360 early Sunday, within 6.4 percent of its March 14 all-time high of $73,798.

Analyst Geoff Kendrick wrote in a note to clients last week that “as we approach the US election I expect $100,000 to be reached and then $150,000 by year-end in the case of a Trump victory.”
Kendrick cited the Biden administration’s recent decision to sustain an SEC staff accounting rule opposed by the crypto industry and several federal lawmakers.
Opponents of Staff Accounting Bulletin 121, which took effect in 2022, argue it hinders innovation and places an undue burden on banks that serve the crypto industry.
The SEC said the rule – which requires publicly traded banks to keep digital assets on their balance sheets, contrary to traditional practice with custodial assets – is a safeguard for consumers.
Kendrick expects Trump to adopt a less rigid approach to crypto.