What to know today

  • More incoming data, more meme mania.
  • It’s a new cycle.
  • Can you spell “Nvidia”?

markets

The Employment Situation Is Probably Cooling

How long will the Federal Reserve hold out?

What will be the bigger story today, the May jobs report at 8:30 a.m. ET or Roaring Kitty’s YouTube livestream at 12:00 p.m.?

The FactSet-compiled consensus expectation is that the US economy added 180,000 jobs last month, up from 175,000 in April. The year-to-date high was 315,000 in March.

The consensus sees the unemployment rate steady at 3.9 percent. Economists forecast a 0.3 percent month-over-month rise in hourly earnings, up from 0.2 percent in April.

Earlier incoming data suggest we take the under on the headline number.

The Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey, released on Tuesday, and Wednesday’s private payrolls report from ADP were softer than expected.

Initial jobless claims reached a four-week high of 229,000 during the period ended June 1, exceeding a consensus forecast of 219,000 and up from 221,000 the prior week.

The S&P 500 reached a new all-time high on Thursday, June 6, 2024, before closing down 0.02 percent.

That’s still within the 2024 range of 194,000 to 232,000.

And the labor market still presents a generally healthy picture.

What investors, traders, and speculators – and workers, of course – would like to see now are affirmative steps to ensure that remains the case.

On Thursday the European Central Bank joined the Bank of Canada in creating a permission structure for the Federal Reserve to make its own first cut.

The Federal Open Market Committee meets next week.

The market now expects Jerome Powell and company to move in September, forward from a recent estimate of December, with a total of two cuts this year.

GameStop $GME soared nearly 45 percent after Roaring Kitty announced he’ll host a livestream on YouTube on Friday, June 7, 2024, at 12:00 p.m.

Perhaps, though, we’ve buried the lede.

GameStop $GME soared again on Thursday – 47.45 percent in normal trading, nearly 10 percent in the first 90 minutes of the after-hours session.

Keith Gill, aka Roaring Kitty, is going live at high noon, though he hasn’t disclosed what he plans to discuss.

Roaring Kitty’s YouTube post announcing the livestream includes a lengthy new disclaimer clarifying the “educational and entertainment” purpose of the channel and that the content represents the creator’s opinion.

“This YouTube channel is not under any obligation to update or correct any information provided in these videos,” it reads. “Statements and opinions are subject to change without notice.”

Happy Friday!

deep dive

The Cuts Have Begun

Not all central banks are ready to move.

The European Central Bank cut its benchmark interest by 25 basis points, from 4.00 percent to 3.75 percent, on Thursday.

The ECB joined the Bank of Canada among major central banks in the emerging easing trend, its North American counterpart having trimmed from 5.00 percent to 4.75 percent on Wednesday.

The BoC was the first central bank of a Group of Seven nation to begin to ease policy.

Sweden’s central bank, the Riksbank, and the Swiss National Bank had already begun to cut.

The European Central Bank and the Bank of Canada announced rate cuts this week.

In a statement announcing its first cut since 2019 the ECB noted a “markedly” improved inflation outlook but said it would  “keep policy rates sufficiently restrictive for as long as necessary.”

ECB President Christine Lagarde was careful not to commit to a cycle of cuts.

“Are we today moving into a dialing-back phase? I wouldn’t volunteer that,” Lagarde said following the announcement.

[The European Central Bank cut its benchmark interest rate by 25 basis points on Thursday, June 6, 2024, from 4.00 percent to 3.75 percent.]

“There’s a strong likelihood but it will be data dependent,” Lagarde added, “and what is very uncertain is the speed at which we travel and the time that it will take.”

That sounds a lot like what Federal Reserve officials have been saying, though of course without the rate-cut part.

deep dive |
June 7, 2024

The Cuts Have Begun

THE MAGNIFICENT ONE

Nvidia Is Doing Its Own Thing

Buckle up, it could get even wilder.

It feels like we’re all exposed to Nvidia $NVDA, whether or not we own the stock directly or have engaged ChatGPT.

And it seems like a matter of time before NVDA overtakes Microsoft $MSFT to become the world’s No. 1 company by market capitalization.

NVDA reached a new record high and crossed the $3 trillion barrier again early in the day, though it closed lower by 1.18 percent. Still, the AI chip maker was valued at $2.976 trillion. 

MSFT was still tops at $3.155 trillion. Apple $AAPL, soon to reveal its own artificial intelligence strategy but now No. 3, closed the day at $2.982 trillion.

From the Research Desk, we learn there’s almost nothing but bullish sentiment on NVDA on Wall Street.

Fifty-seven analysts cover the stock, and 52 of them rate it a “buy.” Consensus upside from here over the next 12 months seems slight compared to what we’ve seen over the past 12 months, 10 percent versus 200 percent.

We’ll see how those targets move.

Bank of America, for one, has already adjusted upward its NVDA price, to $1,500, suggesting upside of 24 percent from Thursday’s close.

BofA noted competition from AMD $AMD and Intel $INTC but said NVDA’s head-start on AI and its Blackwell offerings still give it an advantage.

CFRA Research is also moving with the market, upping its 12-month target for NVDA to $1,390 from $1,160 this week.

CFRA highlighted NVDA’s hardware offerings and its expanding reach into AI-edge computing.

Goldman Sachs is sticking with a $1,200 target along with its “buy” rating.

The intensity of NVDA’s rise is historic – we should appreciate it.

Nvidia $NVDA is up more than 213 percent over the trailing 12 months.

Here’s how Stanley Druckenmiller – one of the greatest investors of all time, who put together a 30-year run with an average annual gain of 30 percent – got involved with it:

Well, first of all, I wasn’t early with Nvidia. My young partner was early with Nvidia. He called me in the fall of ’22 and said that he thought all this excitement about blockchain was going to be far outweighed by AI.

And I asked him how to play it and he told me I should buy this company, Nvidia. I didn’t even know how to spell it. I bought it.

Then, a month later, ChatGPT happened. Even an old guy like me could figure out what that meant. So I increased the position substantially.

I said in an interview in June of that year that I expected to own Nvidia for two or three years, that this was a mega-trend like I’d never seen, potentially bigger than the internet.

But when the stock went from 150 to 900 – yes, we did, we did cut that position, and a lot of other positions in late March. I just need a break. We’ve had a – we’ve had a hell of a run.

In that same May 7 conversation with Joe Kernen of CNBC, Druckenmiller said, “Long term, we’re as bullish on AI as we’ve ever been.”

Druckenmiller compared the potential cadence to the internet: “So AI might be a little overhyped now but under-hyped long term.”

We’ll see how long NVDA maintains its hold on what could be a volatile trend.

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