What to Expect in the Stock Market June 3-June 10
Good is BAD
Well, the markets tried to continue the momentum of the previous week but like the Golden State Warriors against the Boston Celtics in Game 1. They just could not carry the momentum into the close on Friday and got wiped out. (Someone explain to me how the Celtics were able to go on a 17-0 run?) The washout was due to the Jobs Report on Friday morning (more on this below) or at least that is what all the news outlets said caused the decline.
Although it was good jobs news, it’s one of those times when good news is bad news for the markets. Because it means the Fed can continue to raise rates. Remember rates act like gravity on stocks, the higher they go the lower stocks go.
Year to Date:
Tale of the Tape
Last week we got the ADP National Employment (which shows us the payroll of private companies). It showed job openings declining and an increasing number of job layoffs (Tesla announced a 10% job cut on Thursday then Elon changed his mind on Saturday). Companies are also implementing hiring freezes (Microsoft and Tesla just announced hiring freezes for parts of their businesses).
We also got the Non-farm payroll from the Bureau of Labor Statistics (this gives us unemployment data, work hours, and earnings). This report told a similar but more upbeat story for job growth. It also showed a gradual deceleration in the labor market.
390,000 jobs added in May vs. an expected 360,000
Unemployment remained at 3.6%
Wages continued its upward ascent, rising by 0.3%
Long term unemployment edged down (meaning more people are coming back to work)
Labor force participation increased as well
The labor market is returning to pre-pandemic levels. This is good but with most things, there are two sides. The negative side to this is employers are going to take control back.
We had Elon Musk send a memo to Tesla employees to bring their behind back to work or put in their two-week notice. Echoing sentiments from many other employers. We already talked about Apple telling their employees to either come back or quit. JP Morgan and other investment banks have had this stance for a while. The dream of working from home being a permanent thing is now over. I expect more companies to announce similar stances.
All of this against the backdrop of gas getting more expensive (more on this below).
My Takeaway: The pendulum is swinging. The pandemic gave employees the power to put pressure on employers for better work situations and more money. But now it's swinging back into the hands of employers. My advice to anyone who is holding out for the "perfect" job and believes you are the ish and companies should bow down to get you to work for them. It's time to wake up from that dream. Companies no longer care to make you happy.
However, there is still time. The pendulum is not fully swung. So grab that job, and ask for that raise ASAP. The season is changing quickly. You don't want to be the one unable to get a jacket because Employee Power Winter is Coming!
Random Interesting/SAD Facts
Hospital employees were killed by a gunman on Wednesday night in Tulsa, Oklahoma
Biden gave a speech about it on Thursday and the Protecting Our Kids Act was added to the house docket (It is not going to pass).
The average price for a gallon of gas is $4.76 as of June 3rd according to AAA
With the war in Ukraine still raging and more sanctions being placed on Russia, prices will continue to rise
People lost $1 billion to crypto scams in 2021, according to a study by the FTC
This is a 60X from 2018 as everyone wanted to become a millionaire overnight
"Wealth gained hastily will dwindle, but whoever gathers little by little will increase it." Proverbs 13:11
This week we get inflation numbers for the month of May on Friday. After an 8.5% reading in March and an 8.3% in April, the hope is to see inflation continue to decline. Which will tell us we have seen the worst of inflation but with gas prices rising again. We might not be as lucky.
The Consumer Sentiment Index will be released this week. Honestly, I used to love the Sentiment Index but now it is just so depressing to look at.
People really are expecting the absolute worst for the economy right now with Sentiment at the same levels as during the Great Recession. It is such a weird period we live in. I recently read an article from Derek Thompson of the Atlantic and he shared the graph below comparing how people feel about the economy versus how they are doing financially.
People feel great about their own financial position but horrible about the economy of the entire nation. So weird!
But it makes sense, we are seeing war for the first time in a generation. We are seeing inflation for the first time in more than 2 decades. Plus every other day there is another mass shooting. So it makes sense.
It’s inflation week for the markets. So the question of the week is, what is the Federal Reserve’s Inflation Target for the US Economy?
Sports I Care About Update
Boston is showing why they were the best Defensive team in the league this season. I honestly thought Golden State would wipe the floor with them but I was wrong. This will be a great series to watch.
Answer to Trivia: 2%.
If this number feels very random to you. Well, you are correct to feel that way. This number is kinda random, so random that it came from a casual remark in a New Zealand TV interview. Not lying read more here.
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God bless Each and Everyone of y’all