DHunplugged #705: Sinkholes Forming

Sinkholes forming

Memes again - Huge Moves

Economy starting to stall

Face Ripper moves into the close

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Warm Up
- Sinkholes forming
- Memes again - Huge Moves
- Economy starting to stall
- Announcing a NEW CTP

Market Update
- Face Ripping - Last Friday
- Software Stocks hammered
- May finished in the green nicely
- Oil Drooping
- Roaring Kitty is back

Face Rip
- Stocks ramped on the last day of the month
- 300 points in 10 minutes to finish the day on Friday
- markets had a good month -
-- Large Cap Growth up 6% for the month
- US real estate up 5%
- Only area LataAm down for May

Sinkhole Forming Again
- MEGA Caps pulling market up - Primarily NVDA
- Monday S&P 500 Flat - S&P Equal Weight  -0.53%

Best Buy Earnings
- "Sluggish Demand"
-  Earnings per share: $1.20 vs. $1.08 expected   Revenue: $8.85 billion vs. $8.96 billion expected
- Best Buy has noticed a pullback in purchases of discretionary items as consumers manage higher costs because of inflation.
- Shares soar

Software stocks Soft
- Salesforce plunges 20% after it posted weaker than expected revenue
- The WisdomTree Cloud Computing Fund, an exchange-traded fund that tracks cloud stocks, slid 5% this week, the sharpest decline since January. Paycom, GitLab, Confluent, Snowflake and ServiceNow all lost at least 10% of their value in the downdraft.
- Dell PLUNGED - 20% too this week

Economics
- April Construction Spending -0.1% vs 0.2% Briefing.com Consensus; prior -0.2%
- May ISM Manufacturing Index 48.7 vs 49.6 Briefing.com consensus; prior 49.2
- May S&P Global US Manufacturing PMI - Final 51.3 vs 50.9 prelim; prior 50.0

Focus on Manufacturing (Briefing.com)
- The May ISM Manufacturing Index checked in at 48.7% (consensus 49.6%), down from 49.2% in April. The dividing line between expansion and contraction is 50.0%, so the May reading suggests there was a faster pace of contraction in the manufacturing sector last month.
- The key takeaway from the report is that it showed a faster pace of contraction in manufacturing activity that will stir worries about the economy missing its mark with a soft landing.
- The New Orders Index slumped to 45.4% from 49.1%, hitting its lowest level since May 2023.
- The Prices Index dropped to 57.0% from 60.9%.
- The Employment Index increased to 51.1% from 48.6%.
- The Backlog of Orders Index fell to 42.4% from 45.4%.
- The Supplier Deliveries Index held steady at 48.9%.
- The Production Index decreased to 50.2% from 51.3%.
- The New Export Orders Index rose to 50.6% from 48.7%.

Fed Cuts - Not Happening
- According to the latest issues of Barrons
- "The Federal Reserve isn’t likely to lower interest rates in 2024.  Elevated inflation, a resilient economy, and a still-strong, if softening labor market argue against the need for easing monetary policy, especially as these conditions are expected to persist through year end."

WAIT A MINUTE
- Rate cut bets for September are back a 66% probability after a slightly weaker than expected JOLTS report
- 10YR Yields @ 4.35% (Down from 4.6% last week)

GDPNow
- Atlanta Fed GDPNow model estimate for Q2 real GDP growth is 1.8%, down from 2.7% on May 31
- Latest downward revision follows today's release of the ISM Manufacturing Index for May and Construction Spending Report for April.

As Usual - Backwards
- OPEC+ prolongs cuts for one year
- OPEC+ agreed on Sunday to extend most of its deep oil output cuts well into 2025 as the group seeks to shore up the market amid tepid demand growth, high interest rates and rising rival U.S. production.