The Morning Call
6/3/26
The
Market
Technical
Tuesday in the
charts.
Summary:
A surge in job
openings (and plunging quits) combined with continued upbeat
earnings sparked a notable decoupling between stocks (higher) and oil
(higher) as traders parsed discordant signals on the prospects of a
US-Iran peace deal. Bond yields tracked oil (and JOLTS helped) but ended
unch-ish, with both gold and the dollar roller-coastering to end unch also. Bitcoin
was clubbed a baby seal, completely decoupling from tech stocks.
Tuesday in the
technical stats.
https://www.barchart.com/stocks/momentum
https://www.barchart.com/stocks/market-performance
https://www.barchart.com/stocks/sectors/rankings
https://www.barchart.com/stocks/signals/new-recommendations
Wednesday morning
setup: US equity futures are mixed as oil prices, bond yields, and USD move
higher in response to the latest overnight attacks in the Middle East with no
public progress on a deal. As reported previously, the US struck Iran’s Qeshm
Island, which was then met with retaliatory Iranian strikes on US bases in
Kuwait; explosions were also reported in Saudi Arabia, and air sirens were set
off in the UAE. US Centcom said that the Iranian drone attacks were
“successfully defeated.” As of 8:00am ET, S&P futures were down 0.1%
but off session lows: absent the now daily gamma squeeze, the S&P is poised
to halt a nine-day rally; Nasdaq futures rose 0.2% with semis bid
premarket led by MRVL, INTC, AVGO, and AMD as Mag7 names are weaker. Some
pockets of tech exuberance are seen in the US pre-market with Marvell adding
12% to Tuesday’s near 33% surge. Tech enthusiasm was once again on display in
Asia with the MSCI APAC index hitting yet another record high. Mag7 have been
used as a funding trade to buy Semis and to make room for deals, according to
JPM. Cyclicals ex-Energy are lagging Defensives. Brent rose 2.3% to top
$98 a barrel. The yield on 10-year Treasuries climbed four basis
points to 4.48% as crude prices stoked concerns about inflationary pressures;
the yield curve is bear flattening with yields up 3-4bp as USD is poised for
its strongest week since mid-May. Data calendar includes May ADP employment
change (8:15am), S&P Global US services PMI (9:45am), and April factory
orders and May ISM services index (10am). Fed speaker slate includes Barr
(9am) and Logan (4pm), and Beige Book is slated for 2pm release.
Fundamental
Headlines
The
Economy
US
Weekly mortgage
applications declined 2.5% while purchase applications were off 2.9%.
Month to date
retail chain store sales were up 9%, a similar rise as the preceding week.
April job openings
(JOLTS) totaled 7.62 million versus consensus of 6.88 million.
https://bonddad.blogspot.com/2026/06/april-jolts-report-confirms-low-hire.html
May light vehicle sales
totaled 16.1 million versus projections of 16.0 million.
The June small
business optimism index came in at 42.5 versus estimates of 44.5.
International
April EU PPI was reported up 0.6% versus expectations
of +0.4%.
The May Japanese
services PMI was 50.0, in line; its May composite PMI was 51.0, also in line;
the May German services PMI was 48.1 versus 47.8; its May composite PMI was
48.8 versus 48.6; the May EU services PMI was 47.7 versus 46.4, its May composite
PMI was 48.5 versus 47.5; the May UK services PMI was 49.3 versus 47.9; its May
composite PMI was 49.7 versus 48.5.
Other
Overnight
News
Even as the piles
of capital secured have grown ever larger, the ability to deploy it in the
artificial intelligence race has become less certain. Supply-chain backlogs,
permitting fights and availability of power supplies are among the issues that
have caused the construction of data centers to fall behind targeted timelines,
with the gap growing wider in recent months.
Federal Reserve
Chairman Kevin Warsh has tapped two outside associates (Paul Winfree and Daniel
Heil) to advise him while he settles into the job, one of whom previously
helped write a conservative blueprint that recommended a radical restructuring
of the central bank.
Federal Reserve
watchers expect Kevin Warsh to begin revamping the central bank’s rate guidance
as soon as this month, as the newly appointed chair embarks on a sweeping
overhaul of the institution. Several former top officials said that they
expected Warsh, whom President Donald Trump swore in to succeed Jay Powell as
Fed chair in May, to begin rolling back the central bank’s “forward guidance”
on interest rates as soon as the mid-June Federal Open Market Committee
meeting.
Iran
Overnight news.
Fiscal
Policy
The fiscal inheritance of Gen Z---we can only
hope that the author is right.
Inflation
EU inflation assures rate hike.
AI
The
turning point?
https://alhambrapartners.com/weekly-market-pulse-the-turning-point/?src=news
AI will create more jobs, not fewer.
https://www.apollo.com/wealth/the-daily-spark/ai-will-create-more-jobs-not-fewer
Tariffs
Trump proposes new round of tariffs.
Investing
Is the S&P
rising too fast?
https://politicalcalculations.blogspot.com/2026/06/is-s-500-rising-too-much-too-fast.html
The S&P is in
rare territory.
https://www.zerohedge.com/markets/outside-recession-rebounds-sp-hasnt-done-right-1987s-black-monday
Summary:
Global equities have seen remarkable strength given the current array
of risks, with the S&P 500 up +16% in two months. But since WWII, the
S&P 500 has only seen a two-month gain that fast coming out of a recession
(like the GFC and Covid-19) or before a major crash like Black Monday 1987. .
Along similar lines, credit spreads also remain historically tight, even as
warning signs on the consumer are building. . Nevertheless, this resilience to
geopolitical risk in equity and credit markets still isn’t reflected among
sovereign bonds. 10yr Treasury yields have continued to trade almost entirely
in line with oil prices over the last month, even as other assets have
decoupled. Despite the Strait of Hormuz staying closed longer than initially
anticipated, the oil futures curve has been remarkably contained in the last
two months.
Update on valuations.
https://www.advisorperspectives.com/dshort/updates/2026/06/02/p-e10-and-market-valuation-may-2026
Five investment
themes to watch.
https://giftarticle.ft.com/giftarticle/actions/redeem/b7a261ee-4a73-4ade-813e-2f3b7e7e3522
Stop chasing fund
performance.
https://behaviouralinvestment.com/2026/06/02/please-stop-chasing-fund-performance/
News on Stocks in Our Portfolios
What
I am reading today
Consumer
sentiment and politics.
https://stayathomemacro.substack.com/p/consumer-sentiment-isnt-politics
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