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WEEKLY ROUND-UP THRU JUN 21st 2024: “To FOMO or Not”

Hey everyone, markets continue to pound higher, but they appear tired. I believe we will see some weakness coming up as we round out the month of June. Get my take in this week’s round-up.


Markets recorded modest gains over the shortened trading week, helping push the S&P to fresh all-time highs. The week also saw signs of broadening and rotation in the market, with value stocks outperforming growth shares and most of the major benchmarks outperforming the technology-heavy Nasdaq. Friday was a so-called triple-witching day, with roughly USD 5.5 trillion in options related to indexes, individual stocks, and exchange-traded funds set to expire.

The start of the week brought some additional evidence that easing labor demand and dwindling savings might be making consumers more cautious. On Tuesday, we saw that retail sales had increased only 0.1% in May, according to advance estimates, while falling a downwardly revised 0.2% in April. Industrial production had expanded 0.9% in May, well above consensus expectations and the fastest pace in nearly a year. Factories were also operating at 78.7% of capacity, a tick above expectations and the highest level since last November. And data released later in the week also arguably suggested that the economy was stronger than indicated by the retail sales data. On Friday, S&P Global announced that its composite index of business activity had risen to 54.6 in June, according to preliminary data, its best level in over two years.

The lackluster retail sales data appeared to push longer-term Treasury yields lower, but Friday’s stronger S&P Global readings brought them back up to end the week modestly higher. The markets still believe in over 2 rate cuts for the year while the Feds are sticking with only 1 rate cut so this divergence persists.

As expected, in England the BoE left its key interest rate unchanged at a 16-year high of 5.25%. They stated the headline inflation rate dropped to the central bank’s target of 2% in May, down from 2.3% the month before. Core inflation, which excludes food and energy, eased to 3.5% from 3.9% in April. However, services inflation of 5.7% was higher than consensus expectations. And in the Euro Zone the Composite PMI—combining activity in manufacturing and services—fell to 50.8 from 52.2 in May, according to preliminary figures compiled by S&P Global.

In Japan the yen weakened to around JPY 158.8 against the USD, from the prior week’s 157.4, hovering near fresh 34-year lows as it remained weighed down by U.S.-Japan interest rate differentials. On the economic data front, expansion in business activity across Japan’s private sector stalled in June, with the flash PMI falling to 50.0, from 52.6 in May. Separate data showed that Japan’s exports surged 13.5% year over year in May, helped by weakness in the yen and solid increases in shipments to the U.S. and China.

And in China, industrial production rose a weaker-than-expected 5.6% in May from a year earlier, slowing from April’s 6.7%. Fixed asset investment grew 4% in the calendar year to May compared with a year ago but eased from the January to April period as real estate investment declines deepened. Meanwhile, retail sales increased an above-consensus 3.7% in May from a year earlier and outpaced April’s 2.3% gain. The nationwide urban unemployment rate remained steady at 5%. China’s new home prices fell 0.7% in May, accelerating from a 0.6% drop in April, marking the steepest month-on-month contraction in nearly a decade, according to the statistics bureau.

Enjoy this week’s round-up;

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