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WEEKLY MAkLET ROUND-UP Thru June 9th 2023; “Give Me Market Breadth!”

Hey folks, we are starting to see in the month of June some underperforming equities pick up the space at the Small Cap is showing stronger gains than the tech-heavy NASDAQ. With this upcoming week offering up key Economic data along with the new Federal Reserve Rate and Policy decisions promises us a lot of potential price movement.


US indexes ended modestly higher in a week of relatively subdued trading ahead of the Feds policy meeting and rate announcement next Wednesday. The week was notable for the S&P 500 moving into bull market territory, or up more than 20% off its mid-October lows. Over 248 Days in Bear Market territory was the longest Bear since 1948. It was also notable for broadening market gains, with small-caps outperforming large-caps, and value shares outperforming growth stocks. The Small Cap index fell in May over 2% while NASDAQ was up over 8% however things have flipped thus far in June. Small Cap performance is up 8% while Nasdaq performance in June is essentially flat. This has had the net effect of broadening the market rally in June.

The week’s relatively light economic calendar seemed to support investor sentiment. Data released on Tuesday showed a surprisingly large contraction in the services sector, but the silver lining for investors was evidence of a continuing decline in services prices. The Institute for Supply Management’s gauge of prices paid for services moderated to its lowest level since May 2020, while its gauge of overall activity in the services sector fell to 50.3, indicating virtually stalled growth.

Longer-term Treasury yields rose modestly over the week, although some speculation mounted about how the market would accompany a flood of issuance of short-term bills now that the federal debt ceiling has been raised. There is currently a 72% chance the Feds will pause rate hikes at their June 14th meeting leaving the current range 5% – 5.25% with a higher than 60% probability of another rate hike at their July meeting.

In Europe, ECB officials signaled that borrowing costs are likely to rise again in June, although there appeared to be less unanimity on implementing rate increases in subsequent months. Median consumer expectations for eurozone inflation in the year ahead fell in April to 4.1% from 5.0% in March, according to an ECB survey. We also saw that revised data showed that the eurozone economy shrank by 0.1% sequentially in both the first quarter of this year and the final three months of 2022, meeting the technical definition of a recession. IN addition, we also saw flat eurozone retail sales in April indicating that consumption remained weak while Germany’s industrial sector also continued to deteriorate.

Japan’s economy grew by more than initially estimated over the first quarter of 2023, according to revised figures released by the Cabinet Office. Gross domestic product (GDP) expanded by an annualized 2.7% quarter on quarter, ahead of the initial 1.6% reading and more than forecast by economists.

Meanwhile, Chinese equities were mixed after the latest inflation data increased concerns about the country’s faltering post-pandemic recovery. The PPI fell a worse-than-expected 4.6%, accelerating from a 3.6% decline in April, and marked the weakest reading since May 2020. On the trade front, China’s exports fell 7.5% in May from a year ago, trailing estimates and marking the first decline in three months as global demand weakens. Imports shrank 4.5%, above forecasts.

Enjoy This Week’s Round-Up

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