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M Notes:  Mon, 6-6 Thumbnail

M Notes: Mon, 6-6

Week Close: 6-3
+ (-) %May %
Dow 32,800 -190 -0.6%---
S&P 4,108 -50 -1.2%---
Nasdaq 12,013 -68 -0.6%-0.6%
10-year 2.95 +0.11 +3.9%-3.4%
Oil 120.36 +5.29 +4.6%+9.5%


Markets:  Interesting note… for all of the volatility in May, the S&P and the Dow ended pretty much where they started the month.  

S&P roller coaster last week:  holiday, down, down, up a lot, and down a lot. 

Fed Balance Sheet:   $8.915 trillion.  I’ve heard a number of sources say recently that Quantitative Tightening (QT) may have more of an impact on inflation than the Fed’s interest rate.  As a result, this will have a regular place within M Notes for a while.  

Hurricane”:  JP Morgan CEO Jamie Diamond became the economic story of last week, in my opinion, when he said last Wednesday morning we needed to prepare for the coming Economic “Hurricane”.  He had said we were headed for a coming storm in prior weeks, but Hurricane was new verbiage.   It caught my attention immediately.   And it caught the Market’s attention as well.  The S&P was up +20 before Diamond’s remarks.  Within 30-40 minutes it dropped 70 points (that’s a lot) and remained choppy the rest of the day.  

ISM:  Their Manufacturing Index rose from 55.4 (Apr) to 56.1 (May).   Expectations were for 54.5.  Their Services Index dropped from 57.1 (Apr) to 55.9 (May).  Expectations were for 56.3.  Context:   a number over 50.0 is considered to be an expansion (as opposed to a contraction).  

Jobs:  The consensus was for 325,000 jobs.  The actual number came in at 390,000.  A solid beat.

Jobless claims:  The weekly number came in at 210,000.  The four-week average is 207,000.  

Radio:  Bill and I chatted about the coming Economic “Hurricane”.     Here’s the link: https://parker-wealth.com/bill-and-chris-podcasts/bill-and-chris-fri-6-3 .    You can normally hear us most Friday mornings at 6:38a, 7:38a, and 8:38a on 1100AM.

Recession:  Are we going to move into a Recession?  The consensus is we will.  The question is when.  Different voices say different things.  Last week I had the opportunity to attend a meeting hosted by First Trust Portfolios.  I listened to their CEO, their Chief Investment Officer, and their Chief Economist Brian Wesbury.  I like Wesbury, his views, and the way he explains economics.  He said, while the Recession is coming, it won’t arrive until next year (2023) or 2024.  The reason:   corporate profits will be up 10-15% this year.  Wesbury also feels that the Markets will recoup some, if not all, of their downward moves by the end of the year.  If that happens, that would obviously be great news.  But I got the feeling starting next year we are moving into unchartered waters.  

Unemployment:  The U3 rate remained at 3.6%.




Focus of the week:  It will come on Friday morning at 8:30am when we get the new Consumer Price Index (CPI) number.  Consumer inflation is at 8.3% and the expectation is it will move to 8.2%.

Indicator focus:  Trade deficit (Tue); jobless claims (Thu); and the new CPI number (Fri).