2023.06.03 07:08 LittleCrowAdventures Indigenous Youth Group Tabletop Gaming
2023.06.03 05:29 KoanicSoul Ukraine has allegedly sabotaged Zaporizhia like Chernobyl, to stop Russia and draw NATO in. Biden can't afford another Kabul.
Kawaii-Gopnik Russia really needs that powerplant without any leak, to provide industry of surrounding regions with energy, but very few people understand contexts of the current situation: Soviets built complicated and very well ballanced energy system, including not only NPP, but also cascade of hydro power plants. Donetsk, Dnepr, Zaporozhe and Kharkov regions are just one big power hungry plant. NPP itself is reliant on hydropower and quality of water in Dnepr river. In case of really bad "accident" Russia will forget about development of the newly accuired regions, lack of energy produced by NPP is significant, nearly 30-40%. Accident will affect south of Ukraine with russian majority. It will also be also disaster for ecology of the WHOLE Black Sea. Rose of winds will spread nuclear dust to the West - Poland, Romania, Czechia and further. Nuclear zone will stop russian army from further territorial expansion. This will be border formed by Dnepr and nuclear zones.The basic facts are documented by the International Atomic Energy Agency (IAEA). Even while shut down, ZNPP needs external power grid or diesel to prevent its reactors from overheating.
So, bright new plan. "The Greatest Ukrainian Offensive". The Ukraine would build up a big reserve of fresh troops, then suddenly hurl large chunks of them at particular points on the front. They would, the Americans planned, cut through a point in the front lines, penetrate to Russian rear areas, wreak havoc on those areas, and force Russian troops in danger of being encircled to hastily retreat from territory that had been slowly gained at enormous cost in grinding attritive warfare. I do not know how big the Ukrainian strategic reserve was, but if it was two hundred fifty thousand, they have now committed most of them to grinding attritive warfare, and cupboard is looking as bare of men as it is of artillery and rockets.The USA expected to break Russia economically; China's economic support prevented that. Despite PMC Wagner's heartfelt complaints, Russia is unlikely to run out of convicts anytime soon. Russia is rotating divisions through Ukraine, seasoning reservists for a looming WW3. Russia's historical appetite for losses is much higher than its current losses. This is essentially a civil war, and the Russia bear considers being carved up an existential threat. By underestimating Russia's resolve, NATO is repeating the error of Napoleon and Hitler.
Anonymous Sat 27 May 2023 04:59:49 No.428438077 Report 428437208 Yeah, the killing has been excessive since they pretty much destroyed 95% of Azov fags and assorted true believers in the first 200k dead, now they overshot it by 100%. About 12% of the non-Russian speaking population's prime military aged men in Ukraine are dead or crippled. 12-20% of the same demographic has fled the country. It's over, desu. They are seeing much more of the polish and romanian mercs now, since they literally lack the manpower.Western mass media wrongly assumes that Russia is losing because it does not take the entirety of Ukraine in a blitz, as the USA did to Iraq. However, Russia does not want West Ukraine; the people there do not like Russians. Russia has captured the territory it wants, and is now using the rest of Ukraine as a kettle or cauldron, in which to conveniently destroy whatever NATO wishes to send. This is a good way for Russia to gradually learn how to fight NATO armies in a low-risk environment.
Nehming Names 9h Russia's prudent caution in directly engaging the West is bringing dividends in perhaps unexpected ways. Russia is gaining strategic knowledge of the actual capabilities and weaknesses of our weapon systems and military tactics, with our supply of munitions draining to militarily unsustainable levels, as it engages allied forces in Ukraine. Russia is aware of the continuing progress of the Great Awakening in the West, that is, the knowledge that Western governments, military, and institutions are run by an elite hostile to their heritage populations, and therefore expects to see declining support of Western governments by their citizens. Russia can also see the precipitous decrease in every societal metric in the West: social cohesiveness, general morality, public health, financial stability, military readiness, etc.With these three degradative processes in play, the most strategic thing Russia and China can do is to bide their time, as time itself will act to sap the strength of the West to militarily engage their foes.
tinglevibestoo I listened to a former CIA agent talk about Ukraine the other day. He said that Ukraine is running out of time. It's not that they don't have the weapons. We've sent them a ton of weapons. It's that they don't have enough troops and they're running low on troops. That's how Russia will win. Ukraine can't sustain the manpower. It totally makes sense to use a nuclear false flag as a reason to bring in the extra manpower. Everyone would deem it justified too because it's a threat to the neighboring nations and it'd be an environmental (climate change) catastrophe.
AtlasThis is extremely dangerous, external power is required for reliable cooling of the reactors and pools containing spent nuclear waste. Western media spent months last year pretending Kiev wasn’t shelling ZNPP.
Anonymous Sat 27 May 2023 05:18:50 No.428439721 Report Quoted By: >>428463646 428436425 Still easy to transport diesel enough to keep them going In what? If NATO ops and Mercs are sabotaging trucks coming in, what do you think they are gonna carry diesel in to the plant? Is Russia gonna pack in rotopack Jerry cans on their back. Fill a truck up with 5 gallon cans and hope they make it past the snipers and sabotage? Do you have any clue how much fuel those big generators suck down in a day? Those generators to run the plants during shut down or failures are huge 500kw or bigger they are the size of whole 18 wheeler trailers. Those things will drink 50 gallons an hour. You gonna haul in 2.5 gallon rotopacks one at a time to keep it going?Nuclear power plants have tough shielding. Allegedly the diesel generators are hidden underground. However, the diesel fuel supply is still vulnerable.
OSINTdefender The Main Directorate of Intelligence for Ukraine has announced that the Russian Military is preparing for Large-Scale Provocation in the coming hours at the Zaporizhzhia Nuclear Power Plant in Southern Ukraine that will reportedly Simulate an “Accident” at the Plant causing the Emergency Leak of Radioactive Substances which will be Blamed on Ukrainian Forces.Then Russia announced it had caught saboteurs (presumably Ukrainian) in ZNPP's city:
Saboteurs who were preparing terrorist attacks on the NPP were detained in Energodar. They had with them maps and schematics of the nuclear power plant with marks for strikes that could lead to a nuclear catastrophe. The suspects are involved in collecting and transmitting information about the facilities of the Zaporozhye NPP on the instructions of the Ukrainian authorities. To communicate with the curators, they used foreign satellite systems, as well as foreign weapons for strikes and equipment for conducting reconnaissance and sabotage activities.
The world has turned it's back on *od now *od Is turning His back on the world. He Who Lets has been REMOVED. THE ANGEL OF DEATH HAS COME THE HARVEST OF THE TARES HAS BEGUN. And after these things I saw another angel come down from heaven, having great power; and the earth was lightened with his glory. (Earthquake Lights) And he cried mightily with a strong voice, saying, Babylon the great is fallen, is fallen, and is become the habitation of devils, and the hold of every foul spirit, and a cage of every unclean and hateful bird. For all nations have drunk of the wine of the wrath of her fornication, and the kings of the earth have committed fornication with her, and the merchants of the earth are waxed rich through the abundance of her delicacies. And I heard another voice from heaven, saying, Come out of her, my people, that ye be not partakers of her sins, and that ye receive not of her plagues. For her sins have reached unto heaven, and God hath remembered her iniquities. Reward her even as she rewarded you, and double unto her double according to her works: in the cup which she hath filled fill to her double. How much she hath glorified herself, and lived deliciously, so much torment and sorrow give her: for she saith in her heart, I sit a queen, and am no widow, and shall see no sorrow. (nothing ever happens) Therefore shall her plagues come in one day, death, and mourning, and famine; and she shall be utterly burned with fire: for strong is the Lord God who judgeth her. And the kings of the earth, who have committed fornication and lived deliciously with her, shall bewail her, and lament for her, when they shall see the smoke of her burning, inb4sourceBB claims responsibility for the historical pendulum swinging rightward, via figures such as Elon Musk. His method of influence is the butterfly effect.
the Ukrainians attacking the Nuclear Power station in the hands of the Russians spewing radiation over enough territory that the Russians will turn Kiev into a furnace.– BB 2022-9-24
it's a little less than ten days… Until Nato SpecOps melt down the Uke Nuke plant and blames it on you.He continues:
Nato SpecOps have sabotaged power to the nuke plant. As of this posting, 6 days of diesel fuel remain to provide power to pumps to cool the plant and spent fuel pool. Diesel shipments are being targeted and terminated.He adds:
So now I need to tell you Russia intends a pre emptive strike if nuclear capable F16's are delivered.On the evening of May 27, Red Skull updated:
Doesn't look good at Nuke Plant. Russia has 4 days to get more fuel to the generators. They are working on clearing a flight path. Ukraine will try to stop them on orders of U.S. Uniparty.Sounds like a severe leak, to lose 2 days of fuel in under 24 hours.
Nuclear warheads that USA/UK sent. Specifically for the purpose of being exploded in Ukraine. The false flags will never stop until all out WW3 is declared, or until you root out the pedophile demon cult that is running the show and sending you monkeys to war. War for really no good reason at this point. The cities are destroyed, just withdraw. Ukraine is a kettle right now, a kill box. Do you understand what that means? And it was created on purpose.On May 30, Putin announced that Russia had destroyed the Ukrainian military intelligence headquarters. Photos confirm the damage.
2023.06.03 04:27 rangermanlv Long Logs, Black River, P16 wont work. Help?
2023.06.03 02:26 mxsifr Found this on an old laptop, inspired by one of my first CDDA runs a few major versions ago (yes I save scummed my first night)
2023.06.03 01:43 buchashroom Lemon Grove Homeless commu ity
2023.06.03 01:27 next3days For those in Blacksburg: Weekend Event Rundown
2023.06.03 01:24 Late_Builder6990 Behemoth, Strange Beast
2023.06.03 01:14 Pyroski The War of 1839, Part IV Pine & Liberty
![]() | Battle of Massachusetts Bay submitted by Pyroski to Presidentialpoll [link] [comments] With the U.S. Navy strategically positioned in Narragansett Bay, Commanding General Winfield Scott collaborated with Rear Admiral Charles Stewart to implement an effective blockade strategy. The plan entailed Stewart undertaking a blockade of the Massachusetts Bay to sever the supply lines to Boston and Quincy. Scott and Stewart, both high-ranking military officials, believed that this tactic would not only diminish the morale of the opposing troops through deprivation but also establish a passage for the deployment of troops and vessels via the bay, facilitating a two-front invasion. On February 9th, Rear Admiral Stewart initiated an attack, marking the beginning of a relentless naval bombardment. The assault commenced with the arrival of a formidable U.S. Navy fleet led by Commodore Matthew C. Perry. This fleet consisted of several warships, including steam-powered vessels armed with heavy cannons, and had the objective to displace the existing Yankee presence patrolling the bay and establish their own presence in their place. The naval bombardment unleashed a relentless barrage of cannon fire and explosive shells upon the opposing ships and fortifications in the bay. The American warships strategically positioned themselves, utilizing their superior firepower and extended range to wreak havoc on the enemy's defenses. Under the command of Rear Admiral John C. Percival, the Yankee forces fiercely attempted to resist the onslaught, returning fire from their ship's cannons stationed along the coast. However, the overwhelming firepower and precision of the American navy proved to be a decisive advantage. The intense naval bombardment took a toll on the ships engaged in battle. After four days of relentless fighting, on February 13th, Rear Admiral Percival ordered a retreat as U.S. ships swiftly filled the void, effectively establishing a blockade of the Massachusetts Bay. The withdrawal was necessitated by the overwhelming presence and continued firepower of the American Navy, ensuring their control over the strategic waterway. Battle of Cambridge strategy and focused on capturing Cambridge as a means to take control of Boston, Massachusetts. Cambridge's strategic importance stemmed from its proximity to Boston and its position on the opposite side of the Charles River, making it a crucial gateway to the city. Gaining control of Cambridge would provide an invading force with a foothold on the eastern side of the river, potentially facilitating easier access to Boston itself. On Monday, February 20th, Winfield Scott began mobilizing troops along the borders of neighboring settlements, including Quincy, Watertown, and Allston. However, it wasn't until the 28th that Scott issued the order for troops to initiate an assault, once he had assembled a substantial force of 4,000 soldiers along the border. Meanwhile, armed with intelligence regarding the movements of the U.S. troops, Churchill anticipated an attack on either Cambridge or Boston and took defensive measures, including fortifications and deploying troops in both cities. On the 27th, Scott held consultations with John E. Wool and Thomas J. Worth, informing them of his intended timing for launching the offensive. He designated Wool to lead an attack from Quincy and Worth to lead from Watertown. Wool would assume the role of commanding general for the battle, while Scott and Rear Admiral Charles Stewart focused on developing the strategy for the subsequent phase of the plan—the capture of Boston. On the 28th, Major General Wool initiated his division's march towards Cambridge in an attempt to avoid detection by Sylvester Churchill's troops, whom he believed were deployed in the settlements between Quincy and Cambridge. To minimize the risk of exposure, Wool decided to commence the march early in the morning, navigating through rural and wooded areas to evade Yankee troops. Following the same tactics, Worth also set out towards Cambridge later as instructed. In the late morning, Worth launched the assault by mobilizing artillery to weaken the defenses. However, the Yankee forces were already prepared and swiftly retaliated with a relentless barrage of fire upon the advancing troops. This intense exchange of fire between Worth's army and the defending Yankee soldiers persisted for nearly an hour. Meanwhile, Wool's army continued its stealthy march through the woodlands and rural areas. Upon hearing the sound of gunfire in the distance, Wool deduced that the battle had begun prematurely and hastily directed the rest of his troops towards the source of the noise. Arriving nearly an hour into the battle, Wool's troops witnessed a fierce encounter between both sides, resulting in a stalemate. Nevertheless, Wool ordered his soldiers to target the Yankee soldiers with their rifles, creating space for Worth's men to fire artillery. As the relentless barrage of artillery took its toll on the city's defenses, Childs, the commanding officer, ordered troops to reposition themselves further away from the crumbling defenses in anticipation of their eventual collapse. The troops followed the orders accordingly. Finally, around 3:00 P.M., the defenses started to give way, prompting Wool to command his troops to rush into Cambridge. However, they were met with a defensive line of Yankee soldiers who unleashed a volley of fire as soon as the U.S. soldiers entered the city. Simultaneously, Childs instructed soldiers to inform Churchill that both major generals had attacked Cambridge and to relocate troops from Boston to reinforce the defense of Cambridge. Meanwhile, U.S. troops under the command of Major General Wool employed flanking maneuvers on both sides of the defensive line. Despite encountering difficulties in breaching the line, the U.S. troops persisted. After holding together for nearly two hours, the defensive line eventually collapsed under the pressure of the flanking maneuvers, leading to a breakthrough for the U.S. forces. Illustration depicting the Battle of Cambridge, a fierce encounter between American and Yankee troops. The artwork portrays American and Yankee soldiers engaged in a fierce firefight. With the significant breakthrough, U.S. forces swiftly advanced into Cambridge, pushing Yankee troops deeper into the settlement. Meanwhile, Childs made efforts to reorganize and create a diversion to buy enough time for Churchill's larger army to arrive. Eventually, as evening fell, Churchill appeared on the scene with the majority of his troops from Boston, adding 2,000 soldiers to their forces. This sudden increase in numbers enabled the Yankee forces to reclaim much of the territory in Cambridge that had been captured by the U.S. Army. Despite their success, the U.S. army's superior size and technological advancements prevented them from being entirely driven out of Cambridge. As dusk approached, the battle persisted through the night, resulting in significant casualties on both sides. However, with a larger army, the U.S. forces fared better than the Yankees in enduring the losses, allowing them to gradually advance into Cambridge and reclaim lost territory. Throughout the night and into the morning, the conflict continued, with the darkness posing challenges for troops to coordinate tactical maneuvers. Consequently, engaging in intense hand-to-hand combat, the U.S. forces successfully pushed the opposition off the streets and deeper into Cambridge. As the sun rose on the horizon, Sylvester Churchill made a bold move in an attempt to shift the course of the battle and thwart the advancing Americans from seizing what the commanding general deemed the final bastion of defense before they could effectively reach Boston. Determined to alter the tide of the conflict, Churchill issued orders for his troops to divide into smaller units, engaging in street fighting and employing guerrilla tactics. Churchill hoped that these strategic maneuvers would tip the scales of the battle in their favor. Despite Churchill's optimism, Yankee tactics proved ineffective in impeding the U.S. invasion. Under the command of Wool, American troops strategically focused on maintaining a strong and unified front and countering the units employed by Churchill. The ambush and guerrilla tactics employed by the Yankees failed to overcome the superior size and strength of Wool's forces, leading to their defeat. Eventually, in the evening, as the city neared complete capture by American forces, Churchill consulted with his top military officials, including Major Generals Thomas Childs, Joseph Gilbert Totten, and Gideon Johnson Pillow, to negotiate a treaty with Wool. This treaty became the most notable agreement signed on the Atlantic Coast since the Second Siege of New Haven, which had occurred nearly a year prior. During the negotiations, it was agreed that both armies would remain in a total armistice until a deal was reached. After intense discussions, the following terms were included in the final agreement:
With the United Kingdom's agreement to join the war on February 6th, 1843, Samuel Cabot Jr. eagerly anticipated returning to New England to deliver the news. However, due to harsh weather conditions and ships already departing with letters and newspapers to inform Americans of this revelation, Cabot and his diplomats decided to postpone their voyage by a week, hoping for an improvement in the weather. Eventually, on February 13th, the diplomats set sail once again across the treacherous Atlantic Ocean, with Captain Nathaniel Brown Palmer resuming command of their ship, the "Columbia." On Tuesday, March 21st, 1843, after several weeks at sea, the diplomats arrived at Massachusetts Bay, their intended docking destination since their departure. However, they were surprised to find foreign American ships occupying the bay, completely unaware of the ongoing armistice. Acting swiftly, the diplomats instructed Captain Palmer to redirect the vessels towards New Bedford, a port controlled by the Yankee navy. Previous attempts by U.S. forces, led by Admiral Mathew C. Perry to capture Buzzard's Bay had been unsuccessful. As a result, Rear Admiral Charles Stewart made the decision to modify the plan and forgo a coastal blockade of the region, as it was no longer deemed crucial. Thus, the diplomats successfully made an unplanned landing and found a secure harbor for their ship. Upon receiving news of their impending arrival, which quickly spread throughout New England, the diplomats would be swiftly escorted to Daniel Webster's presidential office at the Hartford Estate in Boston, Massachusetts. Traveling via a stagecoach, they would soon reach their destination. As they arrived, they would be promptly ushered into Webster's office. Despite being aware of Britain's entry into the war, Webster anxiously awaited the arrival of his diplomats, as they had not arrived at the expected time. The diplomats arrived to find Daniel Webster in an unexpectedly cheerful state, a stark contrast to his demeanor throughout his presidency. Webster had been burdened by a series of defeats in the War of 1839, Dorr's revolt, and the overall frustrations associated with his role as president. These hardships led Webster to seek solace in alcohol, resulting in alcoholism that became his coping mechanism for the grief caused by his presidential responsibilities. Furthermore, the weight of his challenges contributed to his depression, transforming him into a recluse who rarely ventured out of his office and spent a significant portion of his presidency consumed by excessive drinking. Nevertheless, upon hearing the news of Britain's involvement in the war, Webster's spirits were lifted, restoring a sense of optimism within him that had not been seen since his presidential campaign. He eagerly, yet somewhat intoxicated, welcomed the diplomats into his office to engage in discussions regarding the Downing Street Conference, the negotiations, and the developments involving George Hamilton-Gordon, the Secretary of State for Foreign Affairs, and Prime Minister Robert Peel. Samuel Cabot Jr. relayed to Daniel Webster the concessions made on behalf of New England, which included a promise not to reinstate the Fugitive Acts, along with providing the intricate details of the conference(s). On March 23rd, 1843 at the Federal States Hotel, in the midst of a challenging period for his administration, Daniel Webster, in an effort to regain public trust and address the critical newspapers that had emerged throughout his term, delivered one of the rare public speeches of the War of 1839. Throughout his term, newspapers critical of the Webster administration had become prevalent across New England. However, due to the Sedition Acts, these newspapers were eventually shut down. Moreover, the Federalists suffered significant electoral defeats during Webster's tenure, aware of the need to restore faith among citizens regarding the war and his administration, Webster took the opportunity to speak directly to the public, using his speech as a means to provide reassurance and address the challenges his administration faced. Snippet of Webster's two-and-a-half-hour, "The Boston Address" speech: [1] "Ladies and gentlemen, I stand before you today, filled with the spirit of liberty and the burning desire to protect our great New England from the encroachments of tyranny and oppression. We find ourselves embroiled in a conflict of great magnitude, a war that will determine the very course of our destiny. Let it be known that this is no ordinary war, for it is a war fought not only with steel and powder, but with the indomitable will and unwavering determination of Yankee troops. [2] My fellow countrymen, we gather here in the shadow of history, surrounded by the echoes of our forefathers who fought valiantly for the principles of freedom and justice. Today, we find ourselves faced with a foe whose arrogance knows no bounds, a foe that seeks to trample upon our liberties and extinguish the flame of independence that burns within every New Englander's heart. The United States of America, once our brethren, has once again forsaken the ideals of our Founding Fathers and has chosen to walk the path of oppression. [9] Yet, let it not be forgotten that our cause is just and our resolve unyielding. Weeks ago, on the fateful day of February 6th, the United Kingdom, recognizing the righteousness of our struggle, joined our noble cause. The world now watches as the might of the British Empire stands united with us, against the very nation from which we once sought solace and support. This alliance is a testament to the righteousness of our cause, for it is not merely a battle of arms, but a battle of principles and ideals. [15] This war is not just a struggle for independence; it is a fight against the abhorrent institution of slavery. The Fugitive Acts that have been passed by the United States have violated the very fabric of our moral conscience. They seek to rob men and women of their natural rights, to tear families apart, and to perpetuate an evil that stains the pages of our history. We, as New Englanders, must rise up against this injustice and prove to the world that we will not stand idly by while our fellow human beings suffer under the yoke of bondage. [17] It is a fight to prove that New England is truly independent from America. We have defeated the United States once, and we can do it again. The blood that flows through our veins is the blood of patriots, of those who dared to challenge the status quo and forge a new path. We stand upon the shoulders of giants, and it is our duty to honor their sacrifice by preserving the principles they held dear. As we march forward, let us remember the sacrifices of those who came before us, and let their legacy guide us through the darkest of times. [18] This war is not just about reclaiming our independence; it is a battle for the soul of our nation. It is a struggle to define the values and principles upon which our society is built. We fight for liberty, equality, and justice. We fight to ensure that the principles of our Founding Fathers are not trampled upon and forgotten. We fight to create a society where every person, regardless of their race or background, is treated with dignity and respect. [21] This is a fight against the remnants of oppression and injustice. The Fugitive Acts, once passed by both the United States and New England, were a stain on our collective conscience. They sought to deny individuals their natural rights, tear families apart, and perpetuate the abhorrent institution of slavery. Recognizing the moral imperative to rectify this injustice, New England took a bold step forward and repealed these acts, paving the way for a more equitable society. [22] Let us not forget the lessons of our past, for they shape the path we tread today. The New England Revolutionary War, fought with valor and determination, paved the way for our quest for independence. Our ancestors stood united against oppression, and their courage echoes in our hearts. And let us also remember the Hartford Convention, a pivotal moment in our history. It was there that our regional identity was forged, as we asserted our rights and voiced our grievances against unjust policies. From the fires of adversity, we emerged stronger, more resolute in our determination to protect our liberties and safeguard the interests of New England. [26] Like their forefathers, in the face of adversity, our Yankee troops have shown a courage and determination that is unparalleled. They have weathered the storm of American aggression and stood firm in their conviction. They fight not only for the land upon which they tread but for the principles that make New England unique and distinct. They fight for the freedom of every man, woman, and child who calls this great region home. [29] This war is not just a struggle for soveriegnity; it is a fight against the abhorrent institution of slavery. The Fugitive Acts that have been passed by the United States have violated the very fabric of our moral conscience. They seek to rob men of their natural rights, to tear families apart, and to perpetuate an evil that stains the pages of our history. We, as New Englanders, must rise up against this injustice and prove to the world that we will not stand idly by while our fellow human beings suffer under the yoke of bondage. [31] As we engage in this epic struggle, let us not forget the sacrifices that have been made. Our brave soldiers have left their homes and families behind to fight for a cause they hold dear. They have endured the harsh realities of war, facing danger and uncertainty at every turn. We must honor their sacrifices by supporting them in every way possible, by standing behind them and providing them with the resources and care they need. [34] This war is also a test of our unity and resilience as a people. We must put aside our differences and come together as one. We must recognize that the fight for freedom and justice knows no boundaries. It transcends political affiliations and personal interests. We must stand together, shoulder to shoulder, and show the world the strength and determination of the New England spirit. [37] In this war, we are not alone. The international community watches as our struggle unfolds. The United Kingdom has joined our cause, recognizing the importance of our fight. We stand together, united in our commitment to freedom and justice. Our alliance sends a powerful message to the world that New England will not be silenced, that we will fight for what is right and just. [41] We must also remember that the fight against slavery is central to this war. Slavery is a stain on the conscience of our nation. It is a practice that dehumanizes and oppresses our fellow human beings. We cannot and will not tolerate such an abomination. By fighting against slavery, we not only strike at the heart of injustice but also reaffirm our commitment to the principles of equality and freedom. [43] As we engage in this great struggle, let us draw inspiration from the heroes of our past. Let us remember the battles fought by our forefathers, the sacrifices they made, and the triumphs they achieved. Their legacy lives on in us, and it is our duty to carry their torch forward. [46] This war is not just about defeating the United States; it is about shaping the future of our region and our nation. It is about establishing New England as a beacon of liberty and progress. We have already demonstrated our ability to stand against the might of a powerful nation, and we can do it again. We have the strength, the courage, and the conviction to overcome any obstacle that stands in our way. [49] In conclusion, my fellow New Englanders, let us remember why we fight. Let us remember the principles that have guided us throughout our history. We fight for independence, for freedom, for justice, and for the eradication of slavery. We fight to prove that New England is truly independent from America, and we fight to demonstrate our unwavering commitment to the principles of liberty and equality. [51] As we march forward, let us do so with the knowledge that we are not alone. We are supported by the might of the British Empire, by the solidarity of our fellow New Englanders, and by the principles of justice and righteousness that guide our cause. Together, we will prevail. Together, we will overcome every challenge and obstacle that comes our way. [53] May the spirit of our forefathers guide us, and may the determination of our Yankee troops inspire us. Let us write the next chapter of our history with courage, resilience, and unwavering conviction. The future of New England is in our hands, and we will forge it with honor and integrity. God bless New England, and God bless the cause for which we fight!" President Daniel Webster addresses the citizens of Boston at the Federal States Hotel (United States Hotel) in an illustration capturing his lengthy two-and-a-half-hour \"The Boston Address\" speech. Standing atop a platform, Webster delivers his passionate speech, while the crowd erupts in cheers, energized by his fiery words. Meanwhile, within the hotel, the wives of soldiers protest the war's extension by throwing trash at Webster. |
2023.06.03 01:02 Cheekclappa504 Wtf?
![]() | submitted by Cheekclappa504 to NewOrleans [link] [comments] |
2023.06.03 01:00 HistoryThread The speech that shook Rome Hannibal at the Ticinus
![]() | This video is a modern take on the speech Hannibal Barca gave before the battle of the Ticinus river, as preserved by Livy. submitted by HistoryThread to PhoeniciaHistoryFacts [link] [comments] We at history thread would love to hear your thoughts and we appreciate any viewing and feedback so thank you in advance 😁 In the early stages of the 2nd Punic war Carthaginian general Hannibal Barca led an army of 40,000 Carthaginians, Iberians, and Celts to the banks of the Ticinus River. On the opposing side an equal number of Romans and allied Italians prepared to contest this invasion of their domains, which encompassed nearly all of Italy. The Romans were well supplied and could draw on vast manpower reserves from the many subjugated peoples of the Italian peninsula. Hannibal on the other hand, was cut off from any supplies and reinforcements. Every battle he fought in Italy was all or nothing, for he could expect no relief. Before the battle of the Ticinus river, he gave a speech to his men impressing upon them the importance of winning the battle to come. It is the essence of this speech that we will be recreating today. Ancient #Carthage #Hannibal #Rome #RomanHistory #HistoryThread |
2023.06.03 00:56 HistoryThread The speech that shook Rome Hannibal at the Ticinus
![]() | This video ought to fit like a glove in this subreddit ;) submitted by HistoryThread to carthage [link] [comments] An epic speech delivered by Hannibal, preserved by Livy, and brought to you by yours truly. In the early stages of the 2nd Punic war Carthaginian general Hannibal Barca led an army of 40,000 Carthaginians, Iberians, and Celts to the banks of the Ticinus River. On the opposing side an equal number of Romans and allied Italians prepared to contest this invasion of their domains, which encompassed nearly all of Italy. The Romans were well supplied and could draw on vast manpower reserves from the many subjugated peoples of the Italian peninsula. Hannibal on the other hand, was cut off from any supplies and reinforcements. Every battle he fought in Italy was all or nothing, for he could expect no relief. Before the battle of the Ticinus river, he gave a speech to his men impressing upon them the importance of winning the battle to come. It is the essence of this speech that we will be recreating today. |
2023.06.03 00:17 Apprehensive-Egg-562 Camping in North Pines With Kids in 9 days
2023.06.02 23:56 Thelastfrontiers Solo Trip Report: May 17 - May 29 (LONG)
![]() | I will post the resources used at the end of the post but here is the full itinerary. submitted by Thelastfrontiers to VisitingIceland [link] [comments] May 17th (Arrival) I arrived at KEF around 8 AM, I scheduled the pick up time of my van at 10:00 AM, around 9:15 AM the person from Cheap Campervans picked me up at the airport and drove us to the Happy Campers place. Van pick up was smooth and easy and headed towards Reykjavik since I scheduled a reservation at 12:30 at Sky Lagoon. Stayed at Sky Lagoon for around 2 hours, did the ritual ( It was a nice experience, I'm not used to go to this type of places so it was a new experience for me). Drove to the AirBnB I booked and died for a few hours there, then I walked towards Hallgrimskirkja and just walked around in that area, visited Harpa, Sun Voyager and ate some delicious hot dogs at Bæjarins. I stopped at a Bonus store on the way back to the AirBnB to grab supplies for the trip and I arrived once again at the AirBnB. May 18 (Golden Circle) Woke up, had breakfast and drove towards Thingvellir. I parked at Parking 1 and walked around the park for a few hours, visited Öxarárfoss, Logberg, Almannagjá etc. It was windy and rainy but fortunately I was prepared and had a really great time, although it was a little bit crowded on some parts. Thingvellir Next stop was Brúarfoss. I didn't do the whole hike due to the weather so I stayed in the new parking lot that they have, if I'm not mistaken the price was around 750 ISK, the road is gravel but any 2WD can access it without a problem if you are careful. Place was beautiful and there were maybe 2 or 3 persons there. Drove to Strokkur to see the Geyser, stayed there for a bit until the Geyser "exploded" and took some pictures and then left, beware of the smell here. Drove to Gullfoss and I parked in the lower parking lot, I walked to the side of the waterfall and it was incredible, trully a highlight of the day but make sure to bring some really good hiking shoes/boots and some waterproof equipment. Finally Arrived at Skjol Camping which was pretty good, had a pizza and a beer in the restaurant they have and went to sleep. May 19 (South) First stop of the day was Kerid Crater, you need to pay 450 ISK to enter but it's a beautiful view, walked around the crater and left. Drove to Seljalandsfoss, you also need to pay parking here and it was very crowded when I arrived, walked to Seljalandsfoss and went behind the waterfall. Walked to Gljufrafoss and entered the cave, make sure to bring good waterproof shoes here cause you need to walk in water to enter the cave. Next stop was Skógafoss, simply amazing, I stayed for a bit inside the restaurant that is in front and had something to eat in the meantime that the rain stopped a little, once it stopped I walked to the waterfall, I went up the stairs towards the Fimmvorduhals trail and walked for a mile or so and then I returned. Skógafoss Drove to Kvernufoss, wow, one of the hightlights of the trip. I walked down until the end where the waterfall is and just stayed there for a bit, simply amazing place and I was alone for almost the entire hike. Drove to Dyrhólaey but unfortunately it was closed. Drove to Reynisfjara and stayed there for a bit. Finally arrived at an AirBnB I booked that was just a few minutes from Vik, I was unable to find a camp that was open around that area (or maybe I just didn't do a lot of search). May 20 First stop was the Black Sand beach in Vik, really beautiful views and way less crowded than Reynisfjara. Did the lava show at Vik and it was an amazing experience, definitely recommend doing this if you are in the area, after the show I ate an amazing lamb soup in the restaurant. Drove to Eldhraun, short stop but beautiful views all around. Drove to Fjaðrárgljúfur, road is paved all the way through and it's very easy to access, did the hike and took some amazing shots here, unfortunately mid hike there was a wind storm and I lost my lens hood of my camera and the raincoat I had for my backpack, Iceland winds are no joke! Fjaðrárgljúfur Did a little stop at Fossálar to take some pictures and finally arrived at Tjaldsvæðið í Svínafelli camp, really good facilities. May 21 (South East) Drove to Skaftafell since I booked a Glacier Hike with Arctic Adventures, the whole tour lasted around 4 hours and it was definitely one of the things I liked the most about the trip. Once we returned I had a little bite at the restaurant that the park has and then I continued the trip. (I wanted to do the Svartifoss hike but I was a little tired). Glacier Drove to the Múlagljúfur Canyon, unfortunately weather was pretty bad and since this was a longer hike I decided to not risk it, I was pretty disappointed cause this trail was one of my priorities but safety first! Did a quick stop at Hofskirkja and drove to Fjallsárlón Glacier. I stayed inside the van for a bit cause it was raining and the wind was crazy for a bit but then it calmed down and I went down to the lagoon, amazing views. Drove to Diamond Beach but unfortunately there was no ice in the beach, after this I drove to Höfn and stayed at the camp there. Unfortunately this was probably my least favorite camp, showers are not included in the price so that was a bummer. May 22 (East) First stop was Mount Vestrahorn, you need to pay to enter at the Viking cafe, I get that people sometimes get mad about paying here but I thought it was really worth it, they give you a map with the parking spots and the trails that they have, I visited the viking village which was cool even if it's fake, walked in the black sand beach and saw some wild horses roaming around, after that I grabbed a snack from the Cafe. Vestrahorn Drove to Skútafoss. Honestly, this was probably my favorite place in the whole trip, it was simply amazing and I was probably alone for almost 1 hour until another person arrived, words can't describe this place. Had a stop at Djúpivogur and ate at Við Voginn, then I started the drive to the camp but I made a little stop at Nykurhylsfoss. Arrived at Camp Egilsstadir, If you are visiting during low season I would recommend to arrive there and then do the reservation, I made a reservation before I arrived and once I was there there was someone else at my spot, I talked with the person in recepetion and for some reason my reservation was not appearing so I had to do it once again and grab another spot. Really good facilities tho! May 23 (North) Arrived at Hengifoss. I didn't check my AllTrails app beforehand and the hike was much longer than I expected lol, but it was beautiful. Drove to Fardagafoss. I was planning on going all through the end but the wind was crazy, so I decided to return mid hike. Next stop was Stuðlagil Canyon. I recommend doing the East parking to get to the famous spot, when you cross the bridge you need to follow a road that is not paved, it is a little rough but if you are careful you can do it in a 2WD. Once you park you need to walk for a little while, can't remember but I would say it's a 1-2 mile walk to the canyon, and as I mentioned before, wind was crazy this day but I was able to complete it safely, if it was raining tho I would have returned most likely. Stuðlagil Drove to camp in Ásbyrgi, really beautiful but this was the most expensive camp I stayed at. May 24 Woke up a little late so I decided to skip the Ásbyrgi trails and I drove to Dettifoss, you need to be careful here cause Google Maps will have you take road 864 which was closed when I was there, make sure to always check the correct roads in road.is, in this case I took road 862 and arrived with no problems. Did a quick stop at Hverir, you need to pay for parking and also the smell can get very strong lol. Drove to Mývatn and visited the Grjótagjá cave, I then drove to Hverfjall volcano, you need to pay parking here. Did the hike to the top and stayed for a bit there, the climb is a little steep but once you are up it's easy to walk. Hverfjall Next stop was Goðafoss, parked on the East Side and took some cool pictures, it was a short stop. Finally started my drive to camp, I had a little scare here cause I had to drive between some mountains and that day it was snowing, I checked the road and a very tiny part of Þjóðvegur had wet snow on it, I decided to try the drive and I arrived safely at camp but it was stressful. Camping Varmahlíð was the one I stayed that night and it was lovely, really friendly stuff and good facilities. May 25 Drove to Grafarkirkja, you need to open a little gate to access the parking so just watch out for the signals once you are close. I arrived early in the morning so I had the place for myself for like 30 minutes. Kálfshamarsviti was the next stop, most of the drive to here is done in a gravel road so be careful, the place is very beautiful and there were just a few people when I arrived. Kálfshamarsviti Drove to Hvitserkur, long drive but I'm used to them, also a gravel road if I recall correctly, really peaceful place, I went down to the beach, you need to be careful here not to slip. I was initially planning on staying in Búðardalur tjaldsvæði camping, this one is just on the side of the main road and facilities are kinda lacky and place is kinda small (I can imagine that in summer this gets full really quickly), I was walking around town and found a place called Gil Gesthouse and decided to stay there, it was a lovely stay. May 26 (Snæfellsnes / West) First stop was Berserkjahraun, it was rainy and windy so I just made a quick stop and took some pictures. Went to Kirkjufell, you also need to pay parking here which I didn't know, short stay also due to the weather. Kirkjufell Drove to Svöðufoss but I was unable to do the hike since wind was too strong and visibility was bad, I also had to skip a stop at Lóndrangar unfortunately. Did a little stop at Djúpalónssandur, took some pics and left, was unable to go down to the beach. Stopped at Arnarstapi, rain stopped fortunately but wind was strong still but it was safe to walk around. Visited Búðakirkja. I then decided to go back to Kirkjufell since weather got good and wanted to see it with good visibility, made a short stop there and walked around the lake for a bit until the wind made me return to the van. Camped at Akranes, wind was very strong and it blew the door for the showers. May 27 (Reykjanes) Drove to Lake Kleifarvatn and stayed there and walked down for a bit. Visited Krýsuvík and then drove to Valahnúkamöl, really nice stay here, took some good pictures and also visited the Reykjanes Lighthouse. Valahnúkamöl I was planning on visiting Blue Lagoon but it was fully booked unfortunately so I decided to drive to Reykjavik once again and booked Sky Lagoon again. Walked around the city again and bought souvenirs for family and friends, ate dinner at Kol which was good but pricey and finally I stayed at the Reykjavik Campsite (make sure to make a reservation before hand cause it gets full). May 28 Woke up early in the morning and drove to Cheap Campervans to return the van. Return was fast and without any issues and the staff was kind enough to drop me at the AirBnB that I reserved at Reykjanesbær. I mostly stayed there the whole day to rest. May 29 Flight was scheduled for 9 am so I decided to walk to the airport and just when I was starting my walk a kind person offered me a ride to the airport. Everything went smooth and I returned home. Resources
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2023.06.02 23:41 bigbear0083 Wall Street Week Ahead for the trading week beginning June 5th, 2023
The Dow Jones Industrial Average surged Friday as traders cheered a strong jobs report and the passage of a debt ceiling bill that averts a U.S. default.
The 30-stock Dow jumped 701.19 points, or 2.12%, to end at 33,762.76 — its best day since January. The S&P 500 climbed 1.45% to close at 4,282.37. The Nasdaq Composite advanced 1.07% to 13,240.77, reaching its highest level since April 2022 during the session.
With Friday’s gains, the S&P 500 and Nasdaq finished the holiday-shortened trading week about 1.8% and 2% higher, respectively. The Dow’s Friday advance pushed it into positive territory for the week, finishing up around 2%. The Nasdaq notched its sixth straight week higher, a streak length not seen for the technology-heavy index since 2020.
Nonfarm payrolls grew much more than expected in May, rising 339,000. Economists polled by Dow Jones expected a relatively modest 190,000 increase. It marked the 29th straight month of positive job growth.
Recently strong employment data had been pressuring stocks on the notion it would keep the Federal Reserve raising interest rates. But Friday data also showed average hourly earnings rose less than economists expected year over year, while the unemployment rate was higher than anticipated.
Both data points have given investors hope that the Fed could pause its interest rate hike campaign at the policy meeting later this month, according to Terry Sandven, chief equity strategist at U.S. Bank Wealth Management.
“The so-called Goldilocks has entered the house,” Sandven said. “Clearly, on the bullish side, there are signs that inflation is starting to wane, speculation that the Fed is going to move into pause mode, increasing the likelihood of a soft landing.”
Easing concerns around the U.S. debt ceiling also helped sentiment. The Senate passed a bill to raise the debt ceiling late Thursday night, sending the bill to President Joe Biden’s desk. That comes after the House passed the Fiscal Responsibility Act on Wednesday, just days before the June 5 deadline set by U.S. Treasury Secretary Janet Yellen.
Lululemon shares popped more than 11% on strong results and a guidance boost, while MongoDB surged 28% on a blowout forecast.
A Resilient Labor Market = A Resilient Economy
Another month, another employment surprise. Should we be surprised anymore?
Economists expected payrolls to grow by about 187,000 in May. That’s still a solid job growth number, but a stepdown from what we’ve seen this year through April. However, actual payroll growth beat expectations for the 14th straight month.
The economy created 339,000 jobs in May, close to double expectations. Better still, payroll growth in March and April were revised higher by a total of 93,000!
- March payrolls were revised up by 52,000, from 165,000 to 217,000
- April payroll were revised up by 41,000, from 253,000 to 294,000
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We’ve got two months of payroll data since the Silicon Valley Bank crisis in March, and nothing suggests weakness arising from that banking crisis.
Over the first five months of the year, the economy’s added 1.5 million jobs. That in a nutshell tells you how the economy is doing. For perspective, the average annual payroll growth between 1940 and 2022 was 1.5 million. During the last expansion, 2010-2019, average annual payroll growth was 2.2 million per year.
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But what about the unemployment rate?
The unemployment rate did rise from a 50-year low of 3.4% to 3.7%. This does raise some cause for concern but digging through the data suggests it may be noise more than anything else.
It probably helps to understand that the job growth and unemployment rate data come from different sources. The former comes from asking about 120,000+ businesses how many people they hired. The latter comes from asking about 60,000 households about their employment status. No surprise, the latter is noisier.
A big reason for the weak household survey (and rising unemployment rate) is that more than 400,000 people who were self-employed said they were no longer employed. As you can see in the following chart this is very noisy data, but the recent trend seems to be toward lower self-employment. It’s basically reversing the surge we saw in 2021, when self-employment surged. So, what we’re seeing now may simply be normalization of the labor market as more workers move from self-employment to W2 jobs with an employer.
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Also, the unemployment rate can be impacted by people leaving the labor force (technically defined as those “not looking for work”) and an aging population. I’ve discussed in prior blogs how we can get around this by looking at the employment-population ratio for prime age workers, i.e. workers aged 25-54 years. This measures the number of people working as a percent of the civilian population. Think of it as the opposite of the unemployment rate, and because we use prime age, you also get around the demographic issue.
The good news is that the prime-age employment-population ratio dropped only a tick, from 80.8% to 80.7%. This still leaves it higher than at any point between 2002 and 2022.
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All in all, the labor market remains strong and resilient, despite all the recession calls. Perhaps its not as strong as the headline payroll growth number of 339,000 suggests, but any number above 150,000 would be good at this point. And we’re certainly well above that.
In fact, looking at the job growth and employment-population data, this labor market is probably the strongest we’ve seen since the late 1990’s. Our view since the end of last year has been that the economy can avoid a recession this year, and nothing we’ve seen to date suggests we need to reverse that view. Far from it.
June Better in Pre-Election Years
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Since 1971 June has shone brighter on NASDAQ stocks as a rule ranking eighth best with an 0.8% average gain, up 29 of 52 years. This contributes to NASDAQ’s “Best 8 Months” which ends in June. Small caps also fare well in June. Russell 2000 has averaged 0.6% in June since 1979 advancing 63.6% of the time.
June ranks near the bottom on the Dow Jones Industrials just above September since 1950 with an average loss of 0.2%. S&P 500 performs similarly poorly, ranking ninth, but essentially flat (0.02% average gain).
Despite being much stronger S&P 500 pre-election year June ranks fifth best. For the rest it is just sixth best. Average monthly gains in pre-election year June range from DJIA 1.1% to a respectable 2.4% for NASDAQ. Russell 2000 has been the most consistently bullish in pre-election years, up 8 of the last 11 (72.7% of the time).
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The June Swoon?
Stocks did it again, as the S&P 500 gained 0.2% in the month of May, making it now 10 of the past 11 years that stocks finished green in May. Of course, it gained only 0.01% last year and only 0.25% this year, so the recent returns weren’t off the charts by any measure.
Looking specifically at this year, tech added more than 9% in May, thanks to excitement over AI and Nvidia, with communication services and consumer discretionary also in the green, while the other eight sectors were lower.
Specifically, turning to the month of June, stocks historically have hit a bit of trouble here. Since 1950, up 0.03% on average, the fourth worst month of the year. Over the past 20 years, only January and September have been worse and in the past decade, it is again the fourth worst month. The one bit of good news is during a pre-election year is it up 1.5%, the fifth-best month of the year.
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Here’s another chart we’ve shared before, but years that gained big in January (like 2023) tend to see some periods of consolidation in late May/early June, but eventually experience a surge higher into July. Given the flattish overall May, this could be playing out again.
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What if stocks were having a good year heading into June? Since 1950, if the S&P 500 was up more than 8% for the year going into June (like this year), the month of June was up an impressive 1.2% on average versus the average June return of 0.03%, while in a pre-election year the returns jumped to 1.8%. The percent of the time where returns were higher gets better as well, from 54.8% in your average June to nearly 74% if up 8% or more for the year heading into June, to 80% of the time higher if up 8% for the year in a pre-election year.
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Overall, it has been a very nice run for stocks this year and we remain overweight stocks in the Carson Investment Research House Views. June could potentially cause some volatility, but when all is said and done, we wouldn’t bet against more strength and higher prices in June.
NASDAQ and Russell 2000 Lead June Pre-Election Strength
Over the last 21 years, June has been a rather lackluster month. DJIA, S&P 500 and Russell 1000 have all recorded average losses in the month. Russell 2000 has fared better with a modest average gain. Historically the month has opened respectably, advancing on the first and second trading days.
From there the market then drifted sideways and lower into negative territory just ahead of mid-month. Here the market rallied to create a nice mid-month bulge that quickly evaporated and returned to losses. The brisk, post, mid-month drop is typically followed by a month end rally led by technology and small caps.
Historical performance in pre-election years has been much stronger with all five indexes finishing with average gains. June’s overall pattern in pre-election is similar to the last 21-years pattern with a brief, shallow pullback after a solid start.
In pre-election years the mid-month rally has been much more robust beginning around the sixth trading day and lasting until the fifteenth. Followed by another modest retreat and rally into the end of Q2.
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May and YTD 2023 Asset Class Performance
May 2023 is now behind us, and below is a look at how various asset classes performed during the month using US-listed exchange-traded products as proxies. We also include YTD and YoY total returns.
May was a month of divergence where Tech/AI soared, and the rest of the market fell. Notably, the Nasdaq 100 ETF (QQQ) gained 7.88% in May while the Dow Jones Dividend ETF (DVY) fell 7.7%. That's a 15 percentage-point spread!
At the sector level, it was a similar story. While the Tech sector (XLK) rose 8.9%, sectors like Energy (XLE), Consumer Staples (XLP), Materials (XLB), and Utilities (XLU) fell more than 5%. In total, 8 of 11 sectors were in the red for the month.
Outside the US, we saw pullbacks in most areas of the world other than Brazil, India, and Japan. China, Hong Kong, France, Canada, Italy, Spain, and the UK all fell more than 5%.
All of the commodity-related ETFs/ETNs were in the red for May, with oil (USO) and natural gas (UNG) falling the most at more than 10% each.
Finally, fixed-income ETFs also fell in May as interest rates bounced back. The aggregate bond market ETF (AGG) was down 1.14% in May, leaving it up just 2.6% YTD and down 2.2% year-over-year.
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How Worried Should We Be About Consumer Debt?
A very common question we get these days is whether we’re concerned about the massive increase in consumer debt.
Short answer: No. Well, not yet anyway. But let’s walk through it in 6 charts.
The New York Federal Reserve (NY Fed) releases a quarterly report on household debt and credit, and the latest one that was released last week came with the headline:
“Household Debt Hits $17.05 Trillion in First Quarter.” But let’s look at the details. Household debt increased by $148 billion in Q1. That translates to a 0.9% increase, which is the slowest quarterly increase in two years. Most of the increase in debt was from mortgage originations ($121 billion) – mortgage debt makes up $12 trillion of the total $17 trillion in debt. The rest was auto loan and student loan balances.
Here’s something interesting: credit card balances were flat in Q1, at $986 billion. The fact that overall balances are higher than where they were in 2019 ($927 billion) should not be surprising given we just experienced a lot of inflation. Prices rose at the fastest pace in 40 years, and so you should expect card balances to increase. However, incomes rose as well.
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When you think debt, the key question is whether households are able to service that debt. A good measure of that is to look at debt service costs as a percent of disposable income. As of Q4 2022, that’s at 9.7%, slightly lower than what it was before the pandemic and well below the historical average.
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There’s even better news: disposable income grew 2.9% in the first quarter of 2023. Significantly higher than the 0.9% increase in total household debt, let alone interest costs!
Part of that includes the large boost to social security income due to inflation adjustments in January. Also, tax brackets were adjusted higher, resulting in more money in household wallets.
But even if you exclude these one-off increases, disposable income growth has been strong between February and April, rising at a 5% annualized pace. In fact, employee compensation by itself has risen at a 3.9% annualized pace over the past three months. Meanwhile, inflation is running just about 3% – which means households are seeing real income gains (adjusted for inflation).
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This is why consumers don’t feel the need to borrow to the extent they did before the pandemic. Credit utilization rates measure credit card balances as a percent of available credit. As you can see in the following chart, utilization rates for both credit cards and home equity lines of credit are well below pre-pandemic averages.
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Lack of stress showing in delinquency data as well
Another way to look for signs of consumer stress is to look at the debt delinquency data. As of the first quarter, the NY Fed survey showed that the percent of loan balances that were more than 90 days delinquent was stable around 1.5%. That’s down from 1.9% a year ago, and quite a bit below the 3% average in 2019.
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Even third-party collections are at record lows, with just over 5% of consumers having collections against them as of the first quarter. This is down from 6% a year ago and below the 2019 average of 9.2%. The average collection amount per person is $1,316, which is lower than the $1,452 average in late 2019. This is surprising because just with inflation you’d have thought the amount would be higher.
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All in all, the data on consumer finances is not showing much cause for concern. So, count us in the “not worried” camp. At least, not yet.
Some Good Inflation News
While the market prices in a much higher likelihood of a rate hike at the June meeting, there was actually some decent news on the inflation front today. Starting with the Conference Board's Consumer Confidence report, in this month's update, the inflation expectations component fell to 6.1% from a peak of 7.9% fifteen months ago in March 2022 (first time reading touched 7.9%). Looking at the chart below, this reading was also at 6.1% fifteen months before that first peak. In other words, for all the talk about how inflation has been stickier, the pace of decline in this indicator on the way down has been the same as the pace of increase on the way up.
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Another notable report was today's release of the Dallas Fed Manufacturing report. The Prices Paid component of that report showed a decline from 19.5 down to 13.8 which was the lowest reading since July 2020. For the month of May, two of the five components (Empire and Philadelphia) showed modest m/m increases from multi-month lows, and three showed significant declines to multi-month lows. The chart below shows a composite of the Prices Paid component using the z-scores for each of the five individual components going back to 2010. The peak for this component was 19 months ago in November 2021. Unlike the inflation expectations of the Conference Board survey, this reading hasn't declined quite as fast as it increased in the 19 months leading up to the peak, but at -0.2, it is still below its historical average dating back to 2010 and back down to levels it was at right before the COVID shock hit the economy in early 2020.
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Home Prices Bounce in Hardest Hit Areas
March data on home prices across the country were released today with updated S&P CoreLogic Case Shiller numbers. Case Shiller home prices had been falling rapidly in many of the twenty cities tracked, but in March we actually saw a pretty big month-over-month bounce in some of the hardest-hit areas like San Diego, San Francisco, LA, Denver, and Phoenix. Some cities still saw declines, however. Las Vegas saw a m/m drop of 0.93%, while Miami fell 0.41%, and Seattle fell 0.28%.
On a year-over-year basis, Miami is still up the most with a gain of 10.86%. As shown in the table below, Miami home prices are up 59.87% from pre-COVID levels in February 2020, and they're only down 2.9% from post-COVID highs. Only Tampa is up more than Miami from pre-COVID levels (+61.04%), but Tampa prices are down more from their post-COVID highs (-4.70%) than Miami (-2.90%).
Four cities are down more than 10% from their post-COVID highs: San Diego (-10.12%), Las Vegas (-10.95%), San Francisco (-16.35%), and Seattle (-16.50%). New York is down the least from post-COVID highs of any city tracked at just -2.9%.
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Below we include charts of home price levels across all 20 cities tracked by Case Shiller along with the three composite indices. We've included a vertical red line on each chart to highlight pre-COVID levels. When looking through the charts, you can see this month's small bounce back in most cities after a 6-9 month pullback in prices from peaks seen early last year.
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($NIO $GTLB $GME $CIEN $DOCU $SAIC $ASO $SJM $CXM $THO $OLLI $MOMO $CBRL $FERG $TTC $HQY $CPB $PLAY $QMCO $FCEL $LOVE $ABM $CNM $HTOO $TCOM $JOAN $UNFI $SFIX $CHS $GIII $SIG $SMAR $PL $ZFOX $HYZN $VRA $CASY $MTN $SMTC $ALYA $DBI $SCWX $JILL $OESX $BSE $REVG $VBNK $VRNT $RENT $HCP)
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Monday 6.5.23 Before Market Open:
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Monday 6.5.23 After Market Close:
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Tuesday 6.6.23 Before Market Open:
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Tuesday 6.6.23 After Market Close:
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Wednesday 6.7.23 Before Market Open:
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Wednesday 6.7.23 After Market Close:
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Thursday 6.8.23 Before Market Open:
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Thursday 6.8.23 After Market Close:
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Friday 6.9.23 Before Market Open:
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Friday 6.9.23 After Market Close:
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(T.B.A. THIS WEEKEND.)
(T.B.A. THIS WEEKEND.) (T.B.A. THIS WEEKEND.).
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2023.06.02 23:40 bigbear0083 Wall Street Week Ahead for the trading week beginning June 5th, 2023
The Dow Jones Industrial Average surged Friday as traders cheered a strong jobs report and the passage of a debt ceiling bill that averts a U.S. default.
The 30-stock Dow jumped 701.19 points, or 2.12%, to end at 33,762.76 — its best day since January. The S&P 500 climbed 1.45% to close at 4,282.37. The Nasdaq Composite advanced 1.07% to 13,240.77, reaching its highest level since April 2022 during the session.
With Friday’s gains, the S&P 500 and Nasdaq finished the holiday-shortened trading week about 1.8% and 2% higher, respectively. The Dow’s Friday advance pushed it into positive territory for the week, finishing up around 2%. The Nasdaq notched its sixth straight week higher, a streak length not seen for the technology-heavy index since 2020.
Nonfarm payrolls grew much more than expected in May, rising 339,000. Economists polled by Dow Jones expected a relatively modest 190,000 increase. It marked the 29th straight month of positive job growth.
Recently strong employment data had been pressuring stocks on the notion it would keep the Federal Reserve raising interest rates. But Friday data also showed average hourly earnings rose less than economists expected year over year, while the unemployment rate was higher than anticipated.
Both data points have given investors hope that the Fed could pause its interest rate hike campaign at the policy meeting later this month, according to Terry Sandven, chief equity strategist at U.S. Bank Wealth Management.
“The so-called Goldilocks has entered the house,” Sandven said. “Clearly, on the bullish side, there are signs that inflation is starting to wane, speculation that the Fed is going to move into pause mode, increasing the likelihood of a soft landing.”
Easing concerns around the U.S. debt ceiling also helped sentiment. The Senate passed a bill to raise the debt ceiling late Thursday night, sending the bill to President Joe Biden’s desk. That comes after the House passed the Fiscal Responsibility Act on Wednesday, just days before the June 5 deadline set by U.S. Treasury Secretary Janet Yellen.
Lululemon shares popped more than 11% on strong results and a guidance boost, while MongoDB surged 28% on a blowout forecast.
A Resilient Labor Market = A Resilient Economy
Another month, another employment surprise. Should we be surprised anymore?
Economists expected payrolls to grow by about 187,000 in May. That’s still a solid job growth number, but a stepdown from what we’ve seen this year through April. However, actual payroll growth beat expectations for the 14th straight month.
The economy created 339,000 jobs in May, close to double expectations. Better still, payroll growth in March and April were revised higher by a total of 93,000!
- March payrolls were revised up by 52,000, from 165,000 to 217,000
- April payroll were revised up by 41,000, from 253,000 to 294,000
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We’ve got two months of payroll data since the Silicon Valley Bank crisis in March, and nothing suggests weakness arising from that banking crisis.
Over the first five months of the year, the economy’s added 1.5 million jobs. That in a nutshell tells you how the economy is doing. For perspective, the average annual payroll growth between 1940 and 2022 was 1.5 million. During the last expansion, 2010-2019, average annual payroll growth was 2.2 million per year.
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But what about the unemployment rate?
The unemployment rate did rise from a 50-year low of 3.4% to 3.7%. This does raise some cause for concern but digging through the data suggests it may be noise more than anything else.
It probably helps to understand that the job growth and unemployment rate data come from different sources. The former comes from asking about 120,000+ businesses how many people they hired. The latter comes from asking about 60,000 households about their employment status. No surprise, the latter is noisier.
A big reason for the weak household survey (and rising unemployment rate) is that more than 400,000 people who were self-employed said they were no longer employed. As you can see in the following chart this is very noisy data, but the recent trend seems to be toward lower self-employment. It’s basically reversing the surge we saw in 2021, when self-employment surged. So, what we’re seeing now may simply be normalization of the labor market as more workers move from self-employment to W2 jobs with an employer.
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Also, the unemployment rate can be impacted by people leaving the labor force (technically defined as those “not looking for work”) and an aging population. I’ve discussed in prior blogs how we can get around this by looking at the employment-population ratio for prime age workers, i.e. workers aged 25-54 years. This measures the number of people working as a percent of the civilian population. Think of it as the opposite of the unemployment rate, and because we use prime age, you also get around the demographic issue.
The good news is that the prime-age employment-population ratio dropped only a tick, from 80.8% to 80.7%. This still leaves it higher than at any point between 2002 and 2022.
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All in all, the labor market remains strong and resilient, despite all the recession calls. Perhaps its not as strong as the headline payroll growth number of 339,000 suggests, but any number above 150,000 would be good at this point. And we’re certainly well above that.
In fact, looking at the job growth and employment-population data, this labor market is probably the strongest we’ve seen since the late 1990’s. Our view since the end of last year has been that the economy can avoid a recession this year, and nothing we’ve seen to date suggests we need to reverse that view. Far from it.
June Better in Pre-Election Years
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Since 1971 June has shone brighter on NASDAQ stocks as a rule ranking eighth best with an 0.8% average gain, up 29 of 52 years. This contributes to NASDAQ’s “Best 8 Months” which ends in June. Small caps also fare well in June. Russell 2000 has averaged 0.6% in June since 1979 advancing 63.6% of the time.
June ranks near the bottom on the Dow Jones Industrials just above September since 1950 with an average loss of 0.2%. S&P 500 performs similarly poorly, ranking ninth, but essentially flat (0.02% average gain).
Despite being much stronger S&P 500 pre-election year June ranks fifth best. For the rest it is just sixth best. Average monthly gains in pre-election year June range from DJIA 1.1% to a respectable 2.4% for NASDAQ. Russell 2000 has been the most consistently bullish in pre-election years, up 8 of the last 11 (72.7% of the time).
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The June Swoon?
Stocks did it again, as the S&P 500 gained 0.2% in the month of May, making it now 10 of the past 11 years that stocks finished green in May. Of course, it gained only 0.01% last year and only 0.25% this year, so the recent returns weren’t off the charts by any measure.
Looking specifically at this year, tech added more than 9% in May, thanks to excitement over AI and Nvidia, with communication services and consumer discretionary also in the green, while the other eight sectors were lower.
Specifically, turning to the month of June, stocks historically have hit a bit of trouble here. Since 1950, up 0.03% on average, the fourth worst month of the year. Over the past 20 years, only January and September have been worse and in the past decade, it is again the fourth worst month. The one bit of good news is during a pre-election year is it up 1.5%, the fifth-best month of the year.
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Here’s another chart we’ve shared before, but years that gained big in January (like 2023) tend to see some periods of consolidation in late May/early June, but eventually experience a surge higher into July. Given the flattish overall May, this could be playing out again.
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What if stocks were having a good year heading into June? Since 1950, if the S&P 500 was up more than 8% for the year going into June (like this year), the month of June was up an impressive 1.2% on average versus the average June return of 0.03%, while in a pre-election year the returns jumped to 1.8%. The percent of the time where returns were higher gets better as well, from 54.8% in your average June to nearly 74% if up 8% or more for the year heading into June, to 80% of the time higher if up 8% for the year in a pre-election year.
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Overall, it has been a very nice run for stocks this year and we remain overweight stocks in the Carson Investment Research House Views. June could potentially cause some volatility, but when all is said and done, we wouldn’t bet against more strength and higher prices in June.
NASDAQ and Russell 2000 Lead June Pre-Election Strength
Over the last 21 years, June has been a rather lackluster month. DJIA, S&P 500 and Russell 1000 have all recorded average losses in the month. Russell 2000 has fared better with a modest average gain. Historically the month has opened respectably, advancing on the first and second trading days.
From there the market then drifted sideways and lower into negative territory just ahead of mid-month. Here the market rallied to create a nice mid-month bulge that quickly evaporated and returned to losses. The brisk, post, mid-month drop is typically followed by a month end rally led by technology and small caps.
Historical performance in pre-election years has been much stronger with all five indexes finishing with average gains. June’s overall pattern in pre-election is similar to the last 21-years pattern with a brief, shallow pullback after a solid start.
In pre-election years the mid-month rally has been much more robust beginning around the sixth trading day and lasting until the fifteenth. Followed by another modest retreat and rally into the end of Q2.
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May and YTD 2023 Asset Class Performance
May 2023 is now behind us, and below is a look at how various asset classes performed during the month using US-listed exchange-traded products as proxies. We also include YTD and YoY total returns.
May was a month of divergence where Tech/AI soared, and the rest of the market fell. Notably, the Nasdaq 100 ETF (QQQ) gained 7.88% in May while the Dow Jones Dividend ETF (DVY) fell 7.7%. That's a 15 percentage-point spread!
At the sector level, it was a similar story. While the Tech sector (XLK) rose 8.9%, sectors like Energy (XLE), Consumer Staples (XLP), Materials (XLB), and Utilities (XLU) fell more than 5%. In total, 8 of 11 sectors were in the red for the month.
Outside the US, we saw pullbacks in most areas of the world other than Brazil, India, and Japan. China, Hong Kong, France, Canada, Italy, Spain, and the UK all fell more than 5%.
All of the commodity-related ETFs/ETNs were in the red for May, with oil (USO) and natural gas (UNG) falling the most at more than 10% each.
Finally, fixed-income ETFs also fell in May as interest rates bounced back. The aggregate bond market ETF (AGG) was down 1.14% in May, leaving it up just 2.6% YTD and down 2.2% year-over-year.
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How Worried Should We Be About Consumer Debt?
A very common question we get these days is whether we’re concerned about the massive increase in consumer debt.
Short answer: No. Well, not yet anyway. But let’s walk through it in 6 charts.
The New York Federal Reserve (NY Fed) releases a quarterly report on household debt and credit, and the latest one that was released last week came with the headline:
“Household Debt Hits $17.05 Trillion in First Quarter.” But let’s look at the details. Household debt increased by $148 billion in Q1. That translates to a 0.9% increase, which is the slowest quarterly increase in two years. Most of the increase in debt was from mortgage originations ($121 billion) – mortgage debt makes up $12 trillion of the total $17 trillion in debt. The rest was auto loan and student loan balances.
Here’s something interesting: credit card balances were flat in Q1, at $986 billion. The fact that overall balances are higher than where they were in 2019 ($927 billion) should not be surprising given we just experienced a lot of inflation. Prices rose at the fastest pace in 40 years, and so you should expect card balances to increase. However, incomes rose as well.
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When you think debt, the key question is whether households are able to service that debt. A good measure of that is to look at debt service costs as a percent of disposable income. As of Q4 2022, that’s at 9.7%, slightly lower than what it was before the pandemic and well below the historical average.
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There’s even better news: disposable income grew 2.9% in the first quarter of 2023. Significantly higher than the 0.9% increase in total household debt, let alone interest costs!
Part of that includes the large boost to social security income due to inflation adjustments in January. Also, tax brackets were adjusted higher, resulting in more money in household wallets.
But even if you exclude these one-off increases, disposable income growth has been strong between February and April, rising at a 5% annualized pace. In fact, employee compensation by itself has risen at a 3.9% annualized pace over the past three months. Meanwhile, inflation is running just about 3% – which means households are seeing real income gains (adjusted for inflation).
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This is why consumers don’t feel the need to borrow to the extent they did before the pandemic. Credit utilization rates measure credit card balances as a percent of available credit. As you can see in the following chart, utilization rates for both credit cards and home equity lines of credit are well below pre-pandemic averages.
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Lack of stress showing in delinquency data as well
Another way to look for signs of consumer stress is to look at the debt delinquency data. As of the first quarter, the NY Fed survey showed that the percent of loan balances that were more than 90 days delinquent was stable around 1.5%. That’s down from 1.9% a year ago, and quite a bit below the 3% average in 2019.
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Even third-party collections are at record lows, with just over 5% of consumers having collections against them as of the first quarter. This is down from 6% a year ago and below the 2019 average of 9.2%. The average collection amount per person is $1,316, which is lower than the $1,452 average in late 2019. This is surprising because just with inflation you’d have thought the amount would be higher.
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All in all, the data on consumer finances is not showing much cause for concern. So, count us in the “not worried” camp. At least, not yet.
Some Good Inflation News
While the market prices in a much higher likelihood of a rate hike at the June meeting, there was actually some decent news on the inflation front today. Starting with the Conference Board's Consumer Confidence report, in this month's update, the inflation expectations component fell to 6.1% from a peak of 7.9% fifteen months ago in March 2022 (first time reading touched 7.9%). Looking at the chart below, this reading was also at 6.1% fifteen months before that first peak. In other words, for all the talk about how inflation has been stickier, the pace of decline in this indicator on the way down has been the same as the pace of increase on the way up.
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Another notable report was today's release of the Dallas Fed Manufacturing report. The Prices Paid component of that report showed a decline from 19.5 down to 13.8 which was the lowest reading since July 2020. For the month of May, two of the five components (Empire and Philadelphia) showed modest m/m increases from multi-month lows, and three showed significant declines to multi-month lows. The chart below shows a composite of the Prices Paid component using the z-scores for each of the five individual components going back to 2010. The peak for this component was 19 months ago in November 2021. Unlike the inflation expectations of the Conference Board survey, this reading hasn't declined quite as fast as it increased in the 19 months leading up to the peak, but at -0.2, it is still below its historical average dating back to 2010 and back down to levels it was at right before the COVID shock hit the economy in early 2020.
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Home Prices Bounce in Hardest Hit Areas
March data on home prices across the country were released today with updated S&P CoreLogic Case Shiller numbers. Case Shiller home prices had been falling rapidly in many of the twenty cities tracked, but in March we actually saw a pretty big month-over-month bounce in some of the hardest-hit areas like San Diego, San Francisco, LA, Denver, and Phoenix. Some cities still saw declines, however. Las Vegas saw a m/m drop of 0.93%, while Miami fell 0.41%, and Seattle fell 0.28%.
On a year-over-year basis, Miami is still up the most with a gain of 10.86%. As shown in the table below, Miami home prices are up 59.87% from pre-COVID levels in February 2020, and they're only down 2.9% from post-COVID highs. Only Tampa is up more than Miami from pre-COVID levels (+61.04%), but Tampa prices are down more from their post-COVID highs (-4.70%) than Miami (-2.90%).
Four cities are down more than 10% from their post-COVID highs: San Diego (-10.12%), Las Vegas (-10.95%), San Francisco (-16.35%), and Seattle (-16.50%). New York is down the least from post-COVID highs of any city tracked at just -2.9%.
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Below we include charts of home price levels across all 20 cities tracked by Case Shiller along with the three composite indices. We've included a vertical red line on each chart to highlight pre-COVID levels. When looking through the charts, you can see this month's small bounce back in most cities after a 6-9 month pullback in prices from peaks seen early last year.
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(T.B.A. THIS WEEKEND.)
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2023.06.02 23:39 bigbear0083 Wall Street Week Ahead for the trading week beginning June 5th, 2023
The Dow Jones Industrial Average surged Friday as traders cheered a strong jobs report and the passage of a debt ceiling bill that averts a U.S. default.
The 30-stock Dow jumped 701.19 points, or 2.12%, to end at 33,762.76 — its best day since January. The S&P 500 climbed 1.45% to close at 4,282.37. The Nasdaq Composite advanced 1.07% to 13,240.77, reaching its highest level since April 2022 during the session.
With Friday’s gains, the S&P 500 and Nasdaq finished the holiday-shortened trading week about 1.8% and 2% higher, respectively. The Dow’s Friday advance pushed it into positive territory for the week, finishing up around 2%. The Nasdaq notched its sixth straight week higher, a streak length not seen for the technology-heavy index since 2020.
Nonfarm payrolls grew much more than expected in May, rising 339,000. Economists polled by Dow Jones expected a relatively modest 190,000 increase. It marked the 29th straight month of positive job growth.
Recently strong employment data had been pressuring stocks on the notion it would keep the Federal Reserve raising interest rates. But Friday data also showed average hourly earnings rose less than economists expected year over year, while the unemployment rate was higher than anticipated.
Both data points have given investors hope that the Fed could pause its interest rate hike campaign at the policy meeting later this month, according to Terry Sandven, chief equity strategist at U.S. Bank Wealth Management.
“The so-called Goldilocks has entered the house,” Sandven said. “Clearly, on the bullish side, there are signs that inflation is starting to wane, speculation that the Fed is going to move into pause mode, increasing the likelihood of a soft landing.”
Easing concerns around the U.S. debt ceiling also helped sentiment. The Senate passed a bill to raise the debt ceiling late Thursday night, sending the bill to President Joe Biden’s desk. That comes after the House passed the Fiscal Responsibility Act on Wednesday, just days before the June 5 deadline set by U.S. Treasury Secretary Janet Yellen.
Lululemon shares popped more than 11% on strong results and a guidance boost, while MongoDB surged 28% on a blowout forecast.
A Resilient Labor Market = A Resilient Economy
Another month, another employment surprise. Should we be surprised anymore?
Economists expected payrolls to grow by about 187,000 in May. That’s still a solid job growth number, but a stepdown from what we’ve seen this year through April. However, actual payroll growth beat expectations for the 14th straight month.
The economy created 339,000 jobs in May, close to double expectations. Better still, payroll growth in March and April were revised higher by a total of 93,000!
- March payrolls were revised up by 52,000, from 165,000 to 217,000
- April payroll were revised up by 41,000, from 253,000 to 294,000
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We’ve got two months of payroll data since the Silicon Valley Bank crisis in March, and nothing suggests weakness arising from that banking crisis.
Over the first five months of the year, the economy’s added 1.5 million jobs. That in a nutshell tells you how the economy is doing. For perspective, the average annual payroll growth between 1940 and 2022 was 1.5 million. During the last expansion, 2010-2019, average annual payroll growth was 2.2 million per year.
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But what about the unemployment rate?
The unemployment rate did rise from a 50-year low of 3.4% to 3.7%. This does raise some cause for concern but digging through the data suggests it may be noise more than anything else.
It probably helps to understand that the job growth and unemployment rate data come from different sources. The former comes from asking about 120,000+ businesses how many people they hired. The latter comes from asking about 60,000 households about their employment status. No surprise, the latter is noisier.
A big reason for the weak household survey (and rising unemployment rate) is that more than 400,000 people who were self-employed said they were no longer employed. As you can see in the following chart this is very noisy data, but the recent trend seems to be toward lower self-employment. It’s basically reversing the surge we saw in 2021, when self-employment surged. So, what we’re seeing now may simply be normalization of the labor market as more workers move from self-employment to W2 jobs with an employer.
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Also, the unemployment rate can be impacted by people leaving the labor force (technically defined as those “not looking for work”) and an aging population. I’ve discussed in prior blogs how we can get around this by looking at the employment-population ratio for prime age workers, i.e. workers aged 25-54 years. This measures the number of people working as a percent of the civilian population. Think of it as the opposite of the unemployment rate, and because we use prime age, you also get around the demographic issue.
The good news is that the prime-age employment-population ratio dropped only a tick, from 80.8% to 80.7%. This still leaves it higher than at any point between 2002 and 2022.
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All in all, the labor market remains strong and resilient, despite all the recession calls. Perhaps its not as strong as the headline payroll growth number of 339,000 suggests, but any number above 150,000 would be good at this point. And we’re certainly well above that.
In fact, looking at the job growth and employment-population data, this labor market is probably the strongest we’ve seen since the late 1990’s. Our view since the end of last year has been that the economy can avoid a recession this year, and nothing we’ve seen to date suggests we need to reverse that view. Far from it.
June Better in Pre-Election Years
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Since 1971 June has shone brighter on NASDAQ stocks as a rule ranking eighth best with an 0.8% average gain, up 29 of 52 years. This contributes to NASDAQ’s “Best 8 Months” which ends in June. Small caps also fare well in June. Russell 2000 has averaged 0.6% in June since 1979 advancing 63.6% of the time.
June ranks near the bottom on the Dow Jones Industrials just above September since 1950 with an average loss of 0.2%. S&P 500 performs similarly poorly, ranking ninth, but essentially flat (0.02% average gain).
Despite being much stronger S&P 500 pre-election year June ranks fifth best. For the rest it is just sixth best. Average monthly gains in pre-election year June range from DJIA 1.1% to a respectable 2.4% for NASDAQ. Russell 2000 has been the most consistently bullish in pre-election years, up 8 of the last 11 (72.7% of the time).
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The June Swoon?
Stocks did it again, as the S&P 500 gained 0.2% in the month of May, making it now 10 of the past 11 years that stocks finished green in May. Of course, it gained only 0.01% last year and only 0.25% this year, so the recent returns weren’t off the charts by any measure.
Looking specifically at this year, tech added more than 9% in May, thanks to excitement over AI and Nvidia, with communication services and consumer discretionary also in the green, while the other eight sectors were lower.
Specifically, turning to the month of June, stocks historically have hit a bit of trouble here. Since 1950, up 0.03% on average, the fourth worst month of the year. Over the past 20 years, only January and September have been worse and in the past decade, it is again the fourth worst month. The one bit of good news is during a pre-election year is it up 1.5%, the fifth-best month of the year.
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Here’s another chart we’ve shared before, but years that gained big in January (like 2023) tend to see some periods of consolidation in late May/early June, but eventually experience a surge higher into July. Given the flattish overall May, this could be playing out again.
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What if stocks were having a good year heading into June? Since 1950, if the S&P 500 was up more than 8% for the year going into June (like this year), the month of June was up an impressive 1.2% on average versus the average June return of 0.03%, while in a pre-election year the returns jumped to 1.8%. The percent of the time where returns were higher gets better as well, from 54.8% in your average June to nearly 74% if up 8% or more for the year heading into June, to 80% of the time higher if up 8% for the year in a pre-election year.
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Overall, it has been a very nice run for stocks this year and we remain overweight stocks in the Carson Investment Research House Views. June could potentially cause some volatility, but when all is said and done, we wouldn’t bet against more strength and higher prices in June.
NASDAQ and Russell 2000 Lead June Pre-Election Strength
Over the last 21 years, June has been a rather lackluster month. DJIA, S&P 500 and Russell 1000 have all recorded average losses in the month. Russell 2000 has fared better with a modest average gain. Historically the month has opened respectably, advancing on the first and second trading days.
From there the market then drifted sideways and lower into negative territory just ahead of mid-month. Here the market rallied to create a nice mid-month bulge that quickly evaporated and returned to losses. The brisk, post, mid-month drop is typically followed by a month end rally led by technology and small caps.
Historical performance in pre-election years has been much stronger with all five indexes finishing with average gains. June’s overall pattern in pre-election is similar to the last 21-years pattern with a brief, shallow pullback after a solid start.
In pre-election years the mid-month rally has been much more robust beginning around the sixth trading day and lasting until the fifteenth. Followed by another modest retreat and rally into the end of Q2.
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May and YTD 2023 Asset Class Performance
May 2023 is now behind us, and below is a look at how various asset classes performed during the month using US-listed exchange-traded products as proxies. We also include YTD and YoY total returns.
May was a month of divergence where Tech/AI soared, and the rest of the market fell. Notably, the Nasdaq 100 ETF (QQQ) gained 7.88% in May while the Dow Jones Dividend ETF (DVY) fell 7.7%. That's a 15 percentage-point spread!
At the sector level, it was a similar story. While the Tech sector (XLK) rose 8.9%, sectors like Energy (XLE), Consumer Staples (XLP), Materials (XLB), and Utilities (XLU) fell more than 5%. In total, 8 of 11 sectors were in the red for the month.
Outside the US, we saw pullbacks in most areas of the world other than Brazil, India, and Japan. China, Hong Kong, France, Canada, Italy, Spain, and the UK all fell more than 5%.
All of the commodity-related ETFs/ETNs were in the red for May, with oil (USO) and natural gas (UNG) falling the most at more than 10% each.
Finally, fixed-income ETFs also fell in May as interest rates bounced back. The aggregate bond market ETF (AGG) was down 1.14% in May, leaving it up just 2.6% YTD and down 2.2% year-over-year.
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How Worried Should We Be About Consumer Debt?
A very common question we get these days is whether we’re concerned about the massive increase in consumer debt.
Short answer: No. Well, not yet anyway. But let’s walk through it in 6 charts.
The New York Federal Reserve (NY Fed) releases a quarterly report on household debt and credit, and the latest one that was released last week came with the headline:
“Household Debt Hits $17.05 Trillion in First Quarter.” But let’s look at the details. Household debt increased by $148 billion in Q1. That translates to a 0.9% increase, which is the slowest quarterly increase in two years. Most of the increase in debt was from mortgage originations ($121 billion) – mortgage debt makes up $12 trillion of the total $17 trillion in debt. The rest was auto loan and student loan balances.
Here’s something interesting: credit card balances were flat in Q1, at $986 billion. The fact that overall balances are higher than where they were in 2019 ($927 billion) should not be surprising given we just experienced a lot of inflation. Prices rose at the fastest pace in 40 years, and so you should expect card balances to increase. However, incomes rose as well.
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When you think debt, the key question is whether households are able to service that debt. A good measure of that is to look at debt service costs as a percent of disposable income. As of Q4 2022, that’s at 9.7%, slightly lower than what it was before the pandemic and well below the historical average.
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There’s even better news: disposable income grew 2.9% in the first quarter of 2023. Significantly higher than the 0.9% increase in total household debt, let alone interest costs!
Part of that includes the large boost to social security income due to inflation adjustments in January. Also, tax brackets were adjusted higher, resulting in more money in household wallets.
But even if you exclude these one-off increases, disposable income growth has been strong between February and April, rising at a 5% annualized pace. In fact, employee compensation by itself has risen at a 3.9% annualized pace over the past three months. Meanwhile, inflation is running just about 3% – which means households are seeing real income gains (adjusted for inflation).
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This is why consumers don’t feel the need to borrow to the extent they did before the pandemic. Credit utilization rates measure credit card balances as a percent of available credit. As you can see in the following chart, utilization rates for both credit cards and home equity lines of credit are well below pre-pandemic averages.
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Lack of stress showing in delinquency data as well
Another way to look for signs of consumer stress is to look at the debt delinquency data. As of the first quarter, the NY Fed survey showed that the percent of loan balances that were more than 90 days delinquent was stable around 1.5%. That’s down from 1.9% a year ago, and quite a bit below the 3% average in 2019.
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Even third-party collections are at record lows, with just over 5% of consumers having collections against them as of the first quarter. This is down from 6% a year ago and below the 2019 average of 9.2%. The average collection amount per person is $1,316, which is lower than the $1,452 average in late 2019. This is surprising because just with inflation you’d have thought the amount would be higher.
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All in all, the data on consumer finances is not showing much cause for concern. So, count us in the “not worried” camp. At least, not yet.
Some Good Inflation News
While the market prices in a much higher likelihood of a rate hike at the June meeting, there was actually some decent news on the inflation front today. Starting with the Conference Board's Consumer Confidence report, in this month's update, the inflation expectations component fell to 6.1% from a peak of 7.9% fifteen months ago in March 2022 (first time reading touched 7.9%). Looking at the chart below, this reading was also at 6.1% fifteen months before that first peak. In other words, for all the talk about how inflation has been stickier, the pace of decline in this indicator on the way down has been the same as the pace of increase on the way up.
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Another notable report was today's release of the Dallas Fed Manufacturing report. The Prices Paid component of that report showed a decline from 19.5 down to 13.8 which was the lowest reading since July 2020. For the month of May, two of the five components (Empire and Philadelphia) showed modest m/m increases from multi-month lows, and three showed significant declines to multi-month lows. The chart below shows a composite of the Prices Paid component using the z-scores for each of the five individual components going back to 2010. The peak for this component was 19 months ago in November 2021. Unlike the inflation expectations of the Conference Board survey, this reading hasn't declined quite as fast as it increased in the 19 months leading up to the peak, but at -0.2, it is still below its historical average dating back to 2010 and back down to levels it was at right before the COVID shock hit the economy in early 2020.
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Home Prices Bounce in Hardest Hit Areas
March data on home prices across the country were released today with updated S&P CoreLogic Case Shiller numbers. Case Shiller home prices had been falling rapidly in many of the twenty cities tracked, but in March we actually saw a pretty big month-over-month bounce in some of the hardest-hit areas like San Diego, San Francisco, LA, Denver, and Phoenix. Some cities still saw declines, however. Las Vegas saw a m/m drop of 0.93%, while Miami fell 0.41%, and Seattle fell 0.28%.
On a year-over-year basis, Miami is still up the most with a gain of 10.86%. As shown in the table below, Miami home prices are up 59.87% from pre-COVID levels in February 2020, and they're only down 2.9% from post-COVID highs. Only Tampa is up more than Miami from pre-COVID levels (+61.04%), but Tampa prices are down more from their post-COVID highs (-4.70%) than Miami (-2.90%).
Four cities are down more than 10% from their post-COVID highs: San Diego (-10.12%), Las Vegas (-10.95%), San Francisco (-16.35%), and Seattle (-16.50%). New York is down the least from post-COVID highs of any city tracked at just -2.9%.
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Below we include charts of home price levels across all 20 cities tracked by Case Shiller along with the three composite indices. We've included a vertical red line on each chart to highlight pre-COVID levels. When looking through the charts, you can see this month's small bounce back in most cities after a 6-9 month pullback in prices from peaks seen early last year.
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($NIO $GTLB $GME $CIEN $DOCU $SAIC $ASO $SJM $CXM $THO $OLLI $MOMO $CBRL $FERG $TTC $HQY $CPB $PLAY $QMCO $FCEL $LOVE $ABM $CNM $HTOO $TCOM $JOAN $UNFI $SFIX $CHS $GIII $SIG $SMAR $PL $ZFOX $HYZN $VRA $CASY $MTN $SMTC $ALYA $DBI $SCWX $JILL $OESX $BSE $REVG $VBNK $VRNT $RENT $HCP)
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Wednesday 6.7.23 Before Market Open:
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Thursday 6.8.23 Before Market Open:
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Thursday 6.8.23 After Market Close:
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2023.06.02 23:39 bigbear0083 Wall Street Week Ahead for the trading week beginning June 5th, 2023
The Dow Jones Industrial Average surged Friday as traders cheered a strong jobs report and the passage of a debt ceiling bill that averts a U.S. default.
The 30-stock Dow jumped 701.19 points, or 2.12%, to end at 33,762.76 — its best day since January. The S&P 500 climbed 1.45% to close at 4,282.37. The Nasdaq Composite advanced 1.07% to 13,240.77, reaching its highest level since April 2022 during the session.
With Friday’s gains, the S&P 500 and Nasdaq finished the holiday-shortened trading week about 1.8% and 2% higher, respectively. The Dow’s Friday advance pushed it into positive territory for the week, finishing up around 2%. The Nasdaq notched its sixth straight week higher, a streak length not seen for the technology-heavy index since 2020.
Nonfarm payrolls grew much more than expected in May, rising 339,000. Economists polled by Dow Jones expected a relatively modest 190,000 increase. It marked the 29th straight month of positive job growth.
Recently strong employment data had been pressuring stocks on the notion it would keep the Federal Reserve raising interest rates. But Friday data also showed average hourly earnings rose less than economists expected year over year, while the unemployment rate was higher than anticipated.
Both data points have given investors hope that the Fed could pause its interest rate hike campaign at the policy meeting later this month, according to Terry Sandven, chief equity strategist at U.S. Bank Wealth Management.
“The so-called Goldilocks has entered the house,” Sandven said. “Clearly, on the bullish side, there are signs that inflation is starting to wane, speculation that the Fed is going to move into pause mode, increasing the likelihood of a soft landing.”
Easing concerns around the U.S. debt ceiling also helped sentiment. The Senate passed a bill to raise the debt ceiling late Thursday night, sending the bill to President Joe Biden’s desk. That comes after the House passed the Fiscal Responsibility Act on Wednesday, just days before the June 5 deadline set by U.S. Treasury Secretary Janet Yellen.
Lululemon shares popped more than 11% on strong results and a guidance boost, while MongoDB surged 28% on a blowout forecast.
A Resilient Labor Market = A Resilient Economy
Another month, another employment surprise. Should we be surprised anymore?
Economists expected payrolls to grow by about 187,000 in May. That’s still a solid job growth number, but a stepdown from what we’ve seen this year through April. However, actual payroll growth beat expectations for the 14th straight month.
The economy created 339,000 jobs in May, close to double expectations. Better still, payroll growth in March and April were revised higher by a total of 93,000!
- March payrolls were revised up by 52,000, from 165,000 to 217,000
- April payroll were revised up by 41,000, from 253,000 to 294,000
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We’ve got two months of payroll data since the Silicon Valley Bank crisis in March, and nothing suggests weakness arising from that banking crisis.
Over the first five months of the year, the economy’s added 1.5 million jobs. That in a nutshell tells you how the economy is doing. For perspective, the average annual payroll growth between 1940 and 2022 was 1.5 million. During the last expansion, 2010-2019, average annual payroll growth was 2.2 million per year.
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But what about the unemployment rate?
The unemployment rate did rise from a 50-year low of 3.4% to 3.7%. This does raise some cause for concern but digging through the data suggests it may be noise more than anything else.
It probably helps to understand that the job growth and unemployment rate data come from different sources. The former comes from asking about 120,000+ businesses how many people they hired. The latter comes from asking about 60,000 households about their employment status. No surprise, the latter is noisier.
A big reason for the weak household survey (and rising unemployment rate) is that more than 400,000 people who were self-employed said they were no longer employed. As you can see in the following chart this is very noisy data, but the recent trend seems to be toward lower self-employment. It’s basically reversing the surge we saw in 2021, when self-employment surged. So, what we’re seeing now may simply be normalization of the labor market as more workers move from self-employment to W2 jobs with an employer.
(CLICK HERE FOR THE CHART!)
Also, the unemployment rate can be impacted by people leaving the labor force (technically defined as those “not looking for work”) and an aging population. I’ve discussed in prior blogs how we can get around this by looking at the employment-population ratio for prime age workers, i.e. workers aged 25-54 years. This measures the number of people working as a percent of the civilian population. Think of it as the opposite of the unemployment rate, and because we use prime age, you also get around the demographic issue.
The good news is that the prime-age employment-population ratio dropped only a tick, from 80.8% to 80.7%. This still leaves it higher than at any point between 2002 and 2022.
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All in all, the labor market remains strong and resilient, despite all the recession calls. Perhaps its not as strong as the headline payroll growth number of 339,000 suggests, but any number above 150,000 would be good at this point. And we’re certainly well above that.
In fact, looking at the job growth and employment-population data, this labor market is probably the strongest we’ve seen since the late 1990’s. Our view since the end of last year has been that the economy can avoid a recession this year, and nothing we’ve seen to date suggests we need to reverse that view. Far from it.
June Better in Pre-Election Years
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Since 1971 June has shone brighter on NASDAQ stocks as a rule ranking eighth best with an 0.8% average gain, up 29 of 52 years. This contributes to NASDAQ’s “Best 8 Months” which ends in June. Small caps also fare well in June. Russell 2000 has averaged 0.6% in June since 1979 advancing 63.6% of the time.
June ranks near the bottom on the Dow Jones Industrials just above September since 1950 with an average loss of 0.2%. S&P 500 performs similarly poorly, ranking ninth, but essentially flat (0.02% average gain).
Despite being much stronger S&P 500 pre-election year June ranks fifth best. For the rest it is just sixth best. Average monthly gains in pre-election year June range from DJIA 1.1% to a respectable 2.4% for NASDAQ. Russell 2000 has been the most consistently bullish in pre-election years, up 8 of the last 11 (72.7% of the time).
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The June Swoon?
Stocks did it again, as the S&P 500 gained 0.2% in the month of May, making it now 10 of the past 11 years that stocks finished green in May. Of course, it gained only 0.01% last year and only 0.25% this year, so the recent returns weren’t off the charts by any measure.
Looking specifically at this year, tech added more than 9% in May, thanks to excitement over AI and Nvidia, with communication services and consumer discretionary also in the green, while the other eight sectors were lower.
Specifically, turning to the month of June, stocks historically have hit a bit of trouble here. Since 1950, up 0.03% on average, the fourth worst month of the year. Over the past 20 years, only January and September have been worse and in the past decade, it is again the fourth worst month. The one bit of good news is during a pre-election year is it up 1.5%, the fifth-best month of the year.
(CLICK HERE FOR THE CHART!)
Here’s another chart we’ve shared before, but years that gained big in January (like 2023) tend to see some periods of consolidation in late May/early June, but eventually experience a surge higher into July. Given the flattish overall May, this could be playing out again.
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What if stocks were having a good year heading into June? Since 1950, if the S&P 500 was up more than 8% for the year going into June (like this year), the month of June was up an impressive 1.2% on average versus the average June return of 0.03%, while in a pre-election year the returns jumped to 1.8%. The percent of the time where returns were higher gets better as well, from 54.8% in your average June to nearly 74% if up 8% or more for the year heading into June, to 80% of the time higher if up 8% for the year in a pre-election year.
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Overall, it has been a very nice run for stocks this year and we remain overweight stocks in the Carson Investment Research House Views. June could potentially cause some volatility, but when all is said and done, we wouldn’t bet against more strength and higher prices in June.
NASDAQ and Russell 2000 Lead June Pre-Election Strength
Over the last 21 years, June has been a rather lackluster month. DJIA, S&P 500 and Russell 1000 have all recorded average losses in the month. Russell 2000 has fared better with a modest average gain. Historically the month has opened respectably, advancing on the first and second trading days.
From there the market then drifted sideways and lower into negative territory just ahead of mid-month. Here the market rallied to create a nice mid-month bulge that quickly evaporated and returned to losses. The brisk, post, mid-month drop is typically followed by a month end rally led by technology and small caps.
Historical performance in pre-election years has been much stronger with all five indexes finishing with average gains. June’s overall pattern in pre-election is similar to the last 21-years pattern with a brief, shallow pullback after a solid start.
In pre-election years the mid-month rally has been much more robust beginning around the sixth trading day and lasting until the fifteenth. Followed by another modest retreat and rally into the end of Q2.
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May and YTD 2023 Asset Class Performance
May 2023 is now behind us, and below is a look at how various asset classes performed during the month using US-listed exchange-traded products as proxies. We also include YTD and YoY total returns.
May was a month of divergence where Tech/AI soared, and the rest of the market fell. Notably, the Nasdaq 100 ETF (QQQ) gained 7.88% in May while the Dow Jones Dividend ETF (DVY) fell 7.7%. That's a 15 percentage-point spread!
At the sector level, it was a similar story. While the Tech sector (XLK) rose 8.9%, sectors like Energy (XLE), Consumer Staples (XLP), Materials (XLB), and Utilities (XLU) fell more than 5%. In total, 8 of 11 sectors were in the red for the month.
Outside the US, we saw pullbacks in most areas of the world other than Brazil, India, and Japan. China, Hong Kong, France, Canada, Italy, Spain, and the UK all fell more than 5%.
All of the commodity-related ETFs/ETNs were in the red for May, with oil (USO) and natural gas (UNG) falling the most at more than 10% each.
Finally, fixed-income ETFs also fell in May as interest rates bounced back. The aggregate bond market ETF (AGG) was down 1.14% in May, leaving it up just 2.6% YTD and down 2.2% year-over-year.
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How Worried Should We Be About Consumer Debt?
A very common question we get these days is whether we’re concerned about the massive increase in consumer debt.
Short answer: No. Well, not yet anyway. But let’s walk through it in 6 charts.
The New York Federal Reserve (NY Fed) releases a quarterly report on household debt and credit, and the latest one that was released last week came with the headline:
“Household Debt Hits $17.05 Trillion in First Quarter.” But let’s look at the details. Household debt increased by $148 billion in Q1. That translates to a 0.9% increase, which is the slowest quarterly increase in two years. Most of the increase in debt was from mortgage originations ($121 billion) – mortgage debt makes up $12 trillion of the total $17 trillion in debt. The rest was auto loan and student loan balances.
Here’s something interesting: credit card balances were flat in Q1, at $986 billion. The fact that overall balances are higher than where they were in 2019 ($927 billion) should not be surprising given we just experienced a lot of inflation. Prices rose at the fastest pace in 40 years, and so you should expect card balances to increase. However, incomes rose as well.
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When you think debt, the key question is whether households are able to service that debt. A good measure of that is to look at debt service costs as a percent of disposable income. As of Q4 2022, that’s at 9.7%, slightly lower than what it was before the pandemic and well below the historical average.
(CLICK HERE FOR THE CHART!)
There’s even better news: disposable income grew 2.9% in the first quarter of 2023. Significantly higher than the 0.9% increase in total household debt, let alone interest costs!
Part of that includes the large boost to social security income due to inflation adjustments in January. Also, tax brackets were adjusted higher, resulting in more money in household wallets.
But even if you exclude these one-off increases, disposable income growth has been strong between February and April, rising at a 5% annualized pace. In fact, employee compensation by itself has risen at a 3.9% annualized pace over the past three months. Meanwhile, inflation is running just about 3% – which means households are seeing real income gains (adjusted for inflation).
(CLICK HERE FOR THE CHART!)
This is why consumers don’t feel the need to borrow to the extent they did before the pandemic. Credit utilization rates measure credit card balances as a percent of available credit. As you can see in the following chart, utilization rates for both credit cards and home equity lines of credit are well below pre-pandemic averages.
(CLICK HERE FOR THE CHART!)
Lack of stress showing in delinquency data as well
Another way to look for signs of consumer stress is to look at the debt delinquency data. As of the first quarter, the NY Fed survey showed that the percent of loan balances that were more than 90 days delinquent was stable around 1.5%. That’s down from 1.9% a year ago, and quite a bit below the 3% average in 2019.
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Even third-party collections are at record lows, with just over 5% of consumers having collections against them as of the first quarter. This is down from 6% a year ago and below the 2019 average of 9.2%. The average collection amount per person is $1,316, which is lower than the $1,452 average in late 2019. This is surprising because just with inflation you’d have thought the amount would be higher.
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All in all, the data on consumer finances is not showing much cause for concern. So, count us in the “not worried” camp. At least, not yet.
Some Good Inflation News
While the market prices in a much higher likelihood of a rate hike at the June meeting, there was actually some decent news on the inflation front today. Starting with the Conference Board's Consumer Confidence report, in this month's update, the inflation expectations component fell to 6.1% from a peak of 7.9% fifteen months ago in March 2022 (first time reading touched 7.9%). Looking at the chart below, this reading was also at 6.1% fifteen months before that first peak. In other words, for all the talk about how inflation has been stickier, the pace of decline in this indicator on the way down has been the same as the pace of increase on the way up.
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Another notable report was today's release of the Dallas Fed Manufacturing report. The Prices Paid component of that report showed a decline from 19.5 down to 13.8 which was the lowest reading since July 2020. For the month of May, two of the five components (Empire and Philadelphia) showed modest m/m increases from multi-month lows, and three showed significant declines to multi-month lows. The chart below shows a composite of the Prices Paid component using the z-scores for each of the five individual components going back to 2010. The peak for this component was 19 months ago in November 2021. Unlike the inflation expectations of the Conference Board survey, this reading hasn't declined quite as fast as it increased in the 19 months leading up to the peak, but at -0.2, it is still below its historical average dating back to 2010 and back down to levels it was at right before the COVID shock hit the economy in early 2020.
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Home Prices Bounce in Hardest Hit Areas
March data on home prices across the country were released today with updated S&P CoreLogic Case Shiller numbers. Case Shiller home prices had been falling rapidly in many of the twenty cities tracked, but in March we actually saw a pretty big month-over-month bounce in some of the hardest-hit areas like San Diego, San Francisco, LA, Denver, and Phoenix. Some cities still saw declines, however. Las Vegas saw a m/m drop of 0.93%, while Miami fell 0.41%, and Seattle fell 0.28%.
On a year-over-year basis, Miami is still up the most with a gain of 10.86%. As shown in the table below, Miami home prices are up 59.87% from pre-COVID levels in February 2020, and they're only down 2.9% from post-COVID highs. Only Tampa is up more than Miami from pre-COVID levels (+61.04%), but Tampa prices are down more from their post-COVID highs (-4.70%) than Miami (-2.90%).
Four cities are down more than 10% from their post-COVID highs: San Diego (-10.12%), Las Vegas (-10.95%), San Francisco (-16.35%), and Seattle (-16.50%). New York is down the least from post-COVID highs of any city tracked at just -2.9%.
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Below we include charts of home price levels across all 20 cities tracked by Case Shiller along with the three composite indices. We've included a vertical red line on each chart to highlight pre-COVID levels. When looking through the charts, you can see this month's small bounce back in most cities after a 6-9 month pullback in prices from peaks seen early last year.
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($NIO $GTLB $GME $CIEN $DOCU $SAIC $ASO $SJM $CXM $THO $OLLI $MOMO $CBRL $FERG $TTC $HQY $CPB $PLAY $QMCO $FCEL $LOVE $ABM $CNM $HTOO $TCOM $JOAN $UNFI $SFIX $CHS $GIII $SIG $SMAR $PL $ZFOX $HYZN $VRA $CASY $MTN $SMTC $ALYA $DBI $SCWX $JILL $OESX $BSE $REVG $VBNK $VRNT $RENT $HCP)
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Monday 6.5.23 Before Market Open:
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Thursday 6.8.23 Before Market Open:
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(T.B.A. THIS WEEKEND.)
(T.B.A. THIS WEEKEND.) (T.B.A. THIS WEEKEND.).
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2023.06.02 23:38 bigbear0083 Wall Street Week Ahead for the trading week beginning June 5th, 2023
The Dow Jones Industrial Average surged Friday as traders cheered a strong jobs report and the passage of a debt ceiling bill that averts a U.S. default.
The 30-stock Dow jumped 701.19 points, or 2.12%, to end at 33,762.76 — its best day since January. The S&P 500 climbed 1.45% to close at 4,282.37. The Nasdaq Composite advanced 1.07% to 13,240.77, reaching its highest level since April 2022 during the session.
With Friday’s gains, the S&P 500 and Nasdaq finished the holiday-shortened trading week about 1.8% and 2% higher, respectively. The Dow’s Friday advance pushed it into positive territory for the week, finishing up around 2%. The Nasdaq notched its sixth straight week higher, a streak length not seen for the technology-heavy index since 2020.
Nonfarm payrolls grew much more than expected in May, rising 339,000. Economists polled by Dow Jones expected a relatively modest 190,000 increase. It marked the 29th straight month of positive job growth.
Recently strong employment data had been pressuring stocks on the notion it would keep the Federal Reserve raising interest rates. But Friday data also showed average hourly earnings rose less than economists expected year over year, while the unemployment rate was higher than anticipated.
Both data points have given investors hope that the Fed could pause its interest rate hike campaign at the policy meeting later this month, according to Terry Sandven, chief equity strategist at U.S. Bank Wealth Management.
“The so-called Goldilocks has entered the house,” Sandven said. “Clearly, on the bullish side, there are signs that inflation is starting to wane, speculation that the Fed is going to move into pause mode, increasing the likelihood of a soft landing.”
Easing concerns around the U.S. debt ceiling also helped sentiment. The Senate passed a bill to raise the debt ceiling late Thursday night, sending the bill to President Joe Biden’s desk. That comes after the House passed the Fiscal Responsibility Act on Wednesday, just days before the June 5 deadline set by U.S. Treasury Secretary Janet Yellen.
Lululemon shares popped more than 11% on strong results and a guidance boost, while MongoDB surged 28% on a blowout forecast.
A Resilient Labor Market = A Resilient Economy
Another month, another employment surprise. Should we be surprised anymore?
Economists expected payrolls to grow by about 187,000 in May. That’s still a solid job growth number, but a stepdown from what we’ve seen this year through April. However, actual payroll growth beat expectations for the 14th straight month.
The economy created 339,000 jobs in May, close to double expectations. Better still, payroll growth in March and April were revised higher by a total of 93,000!
- March payrolls were revised up by 52,000, from 165,000 to 217,000
- April payroll were revised up by 41,000, from 253,000 to 294,000
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We’ve got two months of payroll data since the Silicon Valley Bank crisis in March, and nothing suggests weakness arising from that banking crisis.
Over the first five months of the year, the economy’s added 1.5 million jobs. That in a nutshell tells you how the economy is doing. For perspective, the average annual payroll growth between 1940 and 2022 was 1.5 million. During the last expansion, 2010-2019, average annual payroll growth was 2.2 million per year.
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But what about the unemployment rate?
The unemployment rate did rise from a 50-year low of 3.4% to 3.7%. This does raise some cause for concern but digging through the data suggests it may be noise more than anything else.
It probably helps to understand that the job growth and unemployment rate data come from different sources. The former comes from asking about 120,000+ businesses how many people they hired. The latter comes from asking about 60,000 households about their employment status. No surprise, the latter is noisier.
A big reason for the weak household survey (and rising unemployment rate) is that more than 400,000 people who were self-employed said they were no longer employed. As you can see in the following chart this is very noisy data, but the recent trend seems to be toward lower self-employment. It’s basically reversing the surge we saw in 2021, when self-employment surged. So, what we’re seeing now may simply be normalization of the labor market as more workers move from self-employment to W2 jobs with an employer.
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Also, the unemployment rate can be impacted by people leaving the labor force (technically defined as those “not looking for work”) and an aging population. I’ve discussed in prior blogs how we can get around this by looking at the employment-population ratio for prime age workers, i.e. workers aged 25-54 years. This measures the number of people working as a percent of the civilian population. Think of it as the opposite of the unemployment rate, and because we use prime age, you also get around the demographic issue.
The good news is that the prime-age employment-population ratio dropped only a tick, from 80.8% to 80.7%. This still leaves it higher than at any point between 2002 and 2022.
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All in all, the labor market remains strong and resilient, despite all the recession calls. Perhaps its not as strong as the headline payroll growth number of 339,000 suggests, but any number above 150,000 would be good at this point. And we’re certainly well above that.
In fact, looking at the job growth and employment-population data, this labor market is probably the strongest we’ve seen since the late 1990’s. Our view since the end of last year has been that the economy can avoid a recession this year, and nothing we’ve seen to date suggests we need to reverse that view. Far from it.
June Better in Pre-Election Years
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Since 1971 June has shone brighter on NASDAQ stocks as a rule ranking eighth best with an 0.8% average gain, up 29 of 52 years. This contributes to NASDAQ’s “Best 8 Months” which ends in June. Small caps also fare well in June. Russell 2000 has averaged 0.6% in June since 1979 advancing 63.6% of the time.
June ranks near the bottom on the Dow Jones Industrials just above September since 1950 with an average loss of 0.2%. S&P 500 performs similarly poorly, ranking ninth, but essentially flat (0.02% average gain).
Despite being much stronger S&P 500 pre-election year June ranks fifth best. For the rest it is just sixth best. Average monthly gains in pre-election year June range from DJIA 1.1% to a respectable 2.4% for NASDAQ. Russell 2000 has been the most consistently bullish in pre-election years, up 8 of the last 11 (72.7% of the time).
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The June Swoon?
Stocks did it again, as the S&P 500 gained 0.2% in the month of May, making it now 10 of the past 11 years that stocks finished green in May. Of course, it gained only 0.01% last year and only 0.25% this year, so the recent returns weren’t off the charts by any measure.
Looking specifically at this year, tech added more than 9% in May, thanks to excitement over AI and Nvidia, with communication services and consumer discretionary also in the green, while the other eight sectors were lower.
Specifically, turning to the month of June, stocks historically have hit a bit of trouble here. Since 1950, up 0.03% on average, the fourth worst month of the year. Over the past 20 years, only January and September have been worse and in the past decade, it is again the fourth worst month. The one bit of good news is during a pre-election year is it up 1.5%, the fifth-best month of the year.
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Here’s another chart we’ve shared before, but years that gained big in January (like 2023) tend to see some periods of consolidation in late May/early June, but eventually experience a surge higher into July. Given the flattish overall May, this could be playing out again.
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What if stocks were having a good year heading into June? Since 1950, if the S&P 500 was up more than 8% for the year going into June (like this year), the month of June was up an impressive 1.2% on average versus the average June return of 0.03%, while in a pre-election year the returns jumped to 1.8%. The percent of the time where returns were higher gets better as well, from 54.8% in your average June to nearly 74% if up 8% or more for the year heading into June, to 80% of the time higher if up 8% for the year in a pre-election year.
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Overall, it has been a very nice run for stocks this year and we remain overweight stocks in the Carson Investment Research House Views. June could potentially cause some volatility, but when all is said and done, we wouldn’t bet against more strength and higher prices in June.
NASDAQ and Russell 2000 Lead June Pre-Election Strength
Over the last 21 years, June has been a rather lackluster month. DJIA, S&P 500 and Russell 1000 have all recorded average losses in the month. Russell 2000 has fared better with a modest average gain. Historically the month has opened respectably, advancing on the first and second trading days.
From there the market then drifted sideways and lower into negative territory just ahead of mid-month. Here the market rallied to create a nice mid-month bulge that quickly evaporated and returned to losses. The brisk, post, mid-month drop is typically followed by a month end rally led by technology and small caps.
Historical performance in pre-election years has been much stronger with all five indexes finishing with average gains. June’s overall pattern in pre-election is similar to the last 21-years pattern with a brief, shallow pullback after a solid start.
In pre-election years the mid-month rally has been much more robust beginning around the sixth trading day and lasting until the fifteenth. Followed by another modest retreat and rally into the end of Q2.
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May and YTD 2023 Asset Class Performance
May 2023 is now behind us, and below is a look at how various asset classes performed during the month using US-listed exchange-traded products as proxies. We also include YTD and YoY total returns.
May was a month of divergence where Tech/AI soared, and the rest of the market fell. Notably, the Nasdaq 100 ETF (QQQ) gained 7.88% in May while the Dow Jones Dividend ETF (DVY) fell 7.7%. That's a 15 percentage-point spread!
At the sector level, it was a similar story. While the Tech sector (XLK) rose 8.9%, sectors like Energy (XLE), Consumer Staples (XLP), Materials (XLB), and Utilities (XLU) fell more than 5%. In total, 8 of 11 sectors were in the red for the month.
Outside the US, we saw pullbacks in most areas of the world other than Brazil, India, and Japan. China, Hong Kong, France, Canada, Italy, Spain, and the UK all fell more than 5%.
All of the commodity-related ETFs/ETNs were in the red for May, with oil (USO) and natural gas (UNG) falling the most at more than 10% each.
Finally, fixed-income ETFs also fell in May as interest rates bounced back. The aggregate bond market ETF (AGG) was down 1.14% in May, leaving it up just 2.6% YTD and down 2.2% year-over-year.
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How Worried Should We Be About Consumer Debt?
A very common question we get these days is whether we’re concerned about the massive increase in consumer debt.
Short answer: No. Well, not yet anyway. But let’s walk through it in 6 charts.
The New York Federal Reserve (NY Fed) releases a quarterly report on household debt and credit, and the latest one that was released last week came with the headline:
“Household Debt Hits $17.05 Trillion in First Quarter.” But let’s look at the details. Household debt increased by $148 billion in Q1. That translates to a 0.9% increase, which is the slowest quarterly increase in two years. Most of the increase in debt was from mortgage originations ($121 billion) – mortgage debt makes up $12 trillion of the total $17 trillion in debt. The rest was auto loan and student loan balances.
Here’s something interesting: credit card balances were flat in Q1, at $986 billion. The fact that overall balances are higher than where they were in 2019 ($927 billion) should not be surprising given we just experienced a lot of inflation. Prices rose at the fastest pace in 40 years, and so you should expect card balances to increase. However, incomes rose as well.
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When you think debt, the key question is whether households are able to service that debt. A good measure of that is to look at debt service costs as a percent of disposable income. As of Q4 2022, that’s at 9.7%, slightly lower than what it was before the pandemic and well below the historical average.
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There’s even better news: disposable income grew 2.9% in the first quarter of 2023. Significantly higher than the 0.9% increase in total household debt, let alone interest costs!
Part of that includes the large boost to social security income due to inflation adjustments in January. Also, tax brackets were adjusted higher, resulting in more money in household wallets.
But even if you exclude these one-off increases, disposable income growth has been strong between February and April, rising at a 5% annualized pace. In fact, employee compensation by itself has risen at a 3.9% annualized pace over the past three months. Meanwhile, inflation is running just about 3% – which means households are seeing real income gains (adjusted for inflation).
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This is why consumers don’t feel the need to borrow to the extent they did before the pandemic. Credit utilization rates measure credit card balances as a percent of available credit. As you can see in the following chart, utilization rates for both credit cards and home equity lines of credit are well below pre-pandemic averages.
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Lack of stress showing in delinquency data as well
Another way to look for signs of consumer stress is to look at the debt delinquency data. As of the first quarter, the NY Fed survey showed that the percent of loan balances that were more than 90 days delinquent was stable around 1.5%. That’s down from 1.9% a year ago, and quite a bit below the 3% average in 2019.
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Even third-party collections are at record lows, with just over 5% of consumers having collections against them as of the first quarter. This is down from 6% a year ago and below the 2019 average of 9.2%. The average collection amount per person is $1,316, which is lower than the $1,452 average in late 2019. This is surprising because just with inflation you’d have thought the amount would be higher.
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All in all, the data on consumer finances is not showing much cause for concern. So, count us in the “not worried” camp. At least, not yet.
Some Good Inflation News
While the market prices in a much higher likelihood of a rate hike at the June meeting, there was actually some decent news on the inflation front today. Starting with the Conference Board's Consumer Confidence report, in this month's update, the inflation expectations component fell to 6.1% from a peak of 7.9% fifteen months ago in March 2022 (first time reading touched 7.9%). Looking at the chart below, this reading was also at 6.1% fifteen months before that first peak. In other words, for all the talk about how inflation has been stickier, the pace of decline in this indicator on the way down has been the same as the pace of increase on the way up.
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Another notable report was today's release of the Dallas Fed Manufacturing report. The Prices Paid component of that report showed a decline from 19.5 down to 13.8 which was the lowest reading since July 2020. For the month of May, two of the five components (Empire and Philadelphia) showed modest m/m increases from multi-month lows, and three showed significant declines to multi-month lows. The chart below shows a composite of the Prices Paid component using the z-scores for each of the five individual components going back to 2010. The peak for this component was 19 months ago in November 2021. Unlike the inflation expectations of the Conference Board survey, this reading hasn't declined quite as fast as it increased in the 19 months leading up to the peak, but at -0.2, it is still below its historical average dating back to 2010 and back down to levels it was at right before the COVID shock hit the economy in early 2020.
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Home Prices Bounce in Hardest Hit Areas
March data on home prices across the country were released today with updated S&P CoreLogic Case Shiller numbers. Case Shiller home prices had been falling rapidly in many of the twenty cities tracked, but in March we actually saw a pretty big month-over-month bounce in some of the hardest-hit areas like San Diego, San Francisco, LA, Denver, and Phoenix. Some cities still saw declines, however. Las Vegas saw a m/m drop of 0.93%, while Miami fell 0.41%, and Seattle fell 0.28%.
On a year-over-year basis, Miami is still up the most with a gain of 10.86%. As shown in the table below, Miami home prices are up 59.87% from pre-COVID levels in February 2020, and they're only down 2.9% from post-COVID highs. Only Tampa is up more than Miami from pre-COVID levels (+61.04%), but Tampa prices are down more from their post-COVID highs (-4.70%) than Miami (-2.90%).
Four cities are down more than 10% from their post-COVID highs: San Diego (-10.12%), Las Vegas (-10.95%), San Francisco (-16.35%), and Seattle (-16.50%). New York is down the least from post-COVID highs of any city tracked at just -2.9%.
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Below we include charts of home price levels across all 20 cities tracked by Case Shiller along with the three composite indices. We've included a vertical red line on each chart to highlight pre-COVID levels. When looking through the charts, you can see this month's small bounce back in most cities after a 6-9 month pullback in prices from peaks seen early last year.
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($NIO $GTLB $GME $CIEN $DOCU $SAIC $ASO $SJM $CXM $THO $OLLI $MOMO $CBRL $FERG $TTC $HQY $CPB $PLAY $QMCO $FCEL $LOVE $ABM $CNM $HTOO $TCOM $JOAN $UNFI $SFIX $CHS $GIII $SIG $SMAR $PL $ZFOX $HYZN $VRA $CASY $MTN $SMTC $ALYA $DBI $SCWX $JILL $OESX $BSE $REVG $VBNK $VRNT $RENT $HCP)
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2023.06.02 23:37 bigbear0083 Wall Street Week Ahead for the trading week beginning June 5th, 2023
The Dow Jones Industrial Average surged Friday as traders cheered a strong jobs report and the passage of a debt ceiling bill that averts a U.S. default.
The 30-stock Dow jumped 701.19 points, or 2.12%, to end at 33,762.76 — its best day since January. The S&P 500 climbed 1.45% to close at 4,282.37. The Nasdaq Composite advanced 1.07% to 13,240.77, reaching its highest level since April 2022 during the session.
With Friday’s gains, the S&P 500 and Nasdaq finished the holiday-shortened trading week about 1.8% and 2% higher, respectively. The Dow’s Friday advance pushed it into positive territory for the week, finishing up around 2%. The Nasdaq notched its sixth straight week higher, a streak length not seen for the technology-heavy index since 2020.
Nonfarm payrolls grew much more than expected in May, rising 339,000. Economists polled by Dow Jones expected a relatively modest 190,000 increase. It marked the 29th straight month of positive job growth.
Recently strong employment data had been pressuring stocks on the notion it would keep the Federal Reserve raising interest rates. But Friday data also showed average hourly earnings rose less than economists expected year over year, while the unemployment rate was higher than anticipated.
Both data points have given investors hope that the Fed could pause its interest rate hike campaign at the policy meeting later this month, according to Terry Sandven, chief equity strategist at U.S. Bank Wealth Management.
“The so-called Goldilocks has entered the house,” Sandven said. “Clearly, on the bullish side, there are signs that inflation is starting to wane, speculation that the Fed is going to move into pause mode, increasing the likelihood of a soft landing.”
Easing concerns around the U.S. debt ceiling also helped sentiment. The Senate passed a bill to raise the debt ceiling late Thursday night, sending the bill to President Joe Biden’s desk. That comes after the House passed the Fiscal Responsibility Act on Wednesday, just days before the June 5 deadline set by U.S. Treasury Secretary Janet Yellen.
Lululemon shares popped more than 11% on strong results and a guidance boost, while MongoDB surged 28% on a blowout forecast.
A Resilient Labor Market = A Resilient Economy
Another month, another employment surprise. Should we be surprised anymore?
Economists expected payrolls to grow by about 187,000 in May. That’s still a solid job growth number, but a stepdown from what we’ve seen this year through April. However, actual payroll growth beat expectations for the 14th straight month.
The economy created 339,000 jobs in May, close to double expectations. Better still, payroll growth in March and April were revised higher by a total of 93,000!
- March payrolls were revised up by 52,000, from 165,000 to 217,000
- April payroll were revised up by 41,000, from 253,000 to 294,000
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We’ve got two months of payroll data since the Silicon Valley Bank crisis in March, and nothing suggests weakness arising from that banking crisis.
Over the first five months of the year, the economy’s added 1.5 million jobs. That in a nutshell tells you how the economy is doing. For perspective, the average annual payroll growth between 1940 and 2022 was 1.5 million. During the last expansion, 2010-2019, average annual payroll growth was 2.2 million per year.
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But what about the unemployment rate?
The unemployment rate did rise from a 50-year low of 3.4% to 3.7%. This does raise some cause for concern but digging through the data suggests it may be noise more than anything else.
It probably helps to understand that the job growth and unemployment rate data come from different sources. The former comes from asking about 120,000+ businesses how many people they hired. The latter comes from asking about 60,000 households about their employment status. No surprise, the latter is noisier.
A big reason for the weak household survey (and rising unemployment rate) is that more than 400,000 people who were self-employed said they were no longer employed. As you can see in the following chart this is very noisy data, but the recent trend seems to be toward lower self-employment. It’s basically reversing the surge we saw in 2021, when self-employment surged. So, what we’re seeing now may simply be normalization of the labor market as more workers move from self-employment to W2 jobs with an employer.
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Also, the unemployment rate can be impacted by people leaving the labor force (technically defined as those “not looking for work”) and an aging population. I’ve discussed in prior blogs how we can get around this by looking at the employment-population ratio for prime age workers, i.e. workers aged 25-54 years. This measures the number of people working as a percent of the civilian population. Think of it as the opposite of the unemployment rate, and because we use prime age, you also get around the demographic issue.
The good news is that the prime-age employment-population ratio dropped only a tick, from 80.8% to 80.7%. This still leaves it higher than at any point between 2002 and 2022.
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All in all, the labor market remains strong and resilient, despite all the recession calls. Perhaps its not as strong as the headline payroll growth number of 339,000 suggests, but any number above 150,000 would be good at this point. And we’re certainly well above that.
In fact, looking at the job growth and employment-population data, this labor market is probably the strongest we’ve seen since the late 1990’s. Our view since the end of last year has been that the economy can avoid a recession this year, and nothing we’ve seen to date suggests we need to reverse that view. Far from it.
June Better in Pre-Election Years
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Since 1971 June has shone brighter on NASDAQ stocks as a rule ranking eighth best with an 0.8% average gain, up 29 of 52 years. This contributes to NASDAQ’s “Best 8 Months” which ends in June. Small caps also fare well in June. Russell 2000 has averaged 0.6% in June since 1979 advancing 63.6% of the time.
June ranks near the bottom on the Dow Jones Industrials just above September since 1950 with an average loss of 0.2%. S&P 500 performs similarly poorly, ranking ninth, but essentially flat (0.02% average gain).
Despite being much stronger S&P 500 pre-election year June ranks fifth best. For the rest it is just sixth best. Average monthly gains in pre-election year June range from DJIA 1.1% to a respectable 2.4% for NASDAQ. Russell 2000 has been the most consistently bullish in pre-election years, up 8 of the last 11 (72.7% of the time).
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The June Swoon?
Stocks did it again, as the S&P 500 gained 0.2% in the month of May, making it now 10 of the past 11 years that stocks finished green in May. Of course, it gained only 0.01% last year and only 0.25% this year, so the recent returns weren’t off the charts by any measure.
Looking specifically at this year, tech added more than 9% in May, thanks to excitement over AI and Nvidia, with communication services and consumer discretionary also in the green, while the other eight sectors were lower.
Specifically, turning to the month of June, stocks historically have hit a bit of trouble here. Since 1950, up 0.03% on average, the fourth worst month of the year. Over the past 20 years, only January and September have been worse and in the past decade, it is again the fourth worst month. The one bit of good news is during a pre-election year is it up 1.5%, the fifth-best month of the year.
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Here’s another chart we’ve shared before, but years that gained big in January (like 2023) tend to see some periods of consolidation in late May/early June, but eventually experience a surge higher into July. Given the flattish overall May, this could be playing out again.
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What if stocks were having a good year heading into June? Since 1950, if the S&P 500 was up more than 8% for the year going into June (like this year), the month of June was up an impressive 1.2% on average versus the average June return of 0.03%, while in a pre-election year the returns jumped to 1.8%. The percent of the time where returns were higher gets better as well, from 54.8% in your average June to nearly 74% if up 8% or more for the year heading into June, to 80% of the time higher if up 8% for the year in a pre-election year.
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Overall, it has been a very nice run for stocks this year and we remain overweight stocks in the Carson Investment Research House Views. June could potentially cause some volatility, but when all is said and done, we wouldn’t bet against more strength and higher prices in June.
NASDAQ and Russell 2000 Lead June Pre-Election Strength
Over the last 21 years, June has been a rather lackluster month. DJIA, S&P 500 and Russell 1000 have all recorded average losses in the month. Russell 2000 has fared better with a modest average gain. Historically the month has opened respectably, advancing on the first and second trading days.
From there the market then drifted sideways and lower into negative territory just ahead of mid-month. Here the market rallied to create a nice mid-month bulge that quickly evaporated and returned to losses. The brisk, post, mid-month drop is typically followed by a month end rally led by technology and small caps.
Historical performance in pre-election years has been much stronger with all five indexes finishing with average gains. June’s overall pattern in pre-election is similar to the last 21-years pattern with a brief, shallow pullback after a solid start.
In pre-election years the mid-month rally has been much more robust beginning around the sixth trading day and lasting until the fifteenth. Followed by another modest retreat and rally into the end of Q2.
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May and YTD 2023 Asset Class Performance
May 2023 is now behind us, and below is a look at how various asset classes performed during the month using US-listed exchange-traded products as proxies. We also include YTD and YoY total returns.
May was a month of divergence where Tech/AI soared, and the rest of the market fell. Notably, the Nasdaq 100 ETF (QQQ) gained 7.88% in May while the Dow Jones Dividend ETF (DVY) fell 7.7%. That's a 15 percentage-point spread!
At the sector level, it was a similar story. While the Tech sector (XLK) rose 8.9%, sectors like Energy (XLE), Consumer Staples (XLP), Materials (XLB), and Utilities (XLU) fell more than 5%. In total, 8 of 11 sectors were in the red for the month.
Outside the US, we saw pullbacks in most areas of the world other than Brazil, India, and Japan. China, Hong Kong, France, Canada, Italy, Spain, and the UK all fell more than 5%.
All of the commodity-related ETFs/ETNs were in the red for May, with oil (USO) and natural gas (UNG) falling the most at more than 10% each.
Finally, fixed-income ETFs also fell in May as interest rates bounced back. The aggregate bond market ETF (AGG) was down 1.14% in May, leaving it up just 2.6% YTD and down 2.2% year-over-year.
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How Worried Should We Be About Consumer Debt?
A very common question we get these days is whether we’re concerned about the massive increase in consumer debt.
Short answer: No. Well, not yet anyway. But let’s walk through it in 6 charts.
The New York Federal Reserve (NY Fed) releases a quarterly report on household debt and credit, and the latest one that was released last week came with the headline:
“Household Debt Hits $17.05 Trillion in First Quarter.” But let’s look at the details. Household debt increased by $148 billion in Q1. That translates to a 0.9% increase, which is the slowest quarterly increase in two years. Most of the increase in debt was from mortgage originations ($121 billion) – mortgage debt makes up $12 trillion of the total $17 trillion in debt. The rest was auto loan and student loan balances.
Here’s something interesting: credit card balances were flat in Q1, at $986 billion. The fact that overall balances are higher than where they were in 2019 ($927 billion) should not be surprising given we just experienced a lot of inflation. Prices rose at the fastest pace in 40 years, and so you should expect card balances to increase. However, incomes rose as well.
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When you think debt, the key question is whether households are able to service that debt. A good measure of that is to look at debt service costs as a percent of disposable income. As of Q4 2022, that’s at 9.7%, slightly lower than what it was before the pandemic and well below the historical average.
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There’s even better news: disposable income grew 2.9% in the first quarter of 2023. Significantly higher than the 0.9% increase in total household debt, let alone interest costs!
Part of that includes the large boost to social security income due to inflation adjustments in January. Also, tax brackets were adjusted higher, resulting in more money in household wallets.
But even if you exclude these one-off increases, disposable income growth has been strong between February and April, rising at a 5% annualized pace. In fact, employee compensation by itself has risen at a 3.9% annualized pace over the past three months. Meanwhile, inflation is running just about 3% – which means households are seeing real income gains (adjusted for inflation).
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This is why consumers don’t feel the need to borrow to the extent they did before the pandemic. Credit utilization rates measure credit card balances as a percent of available credit. As you can see in the following chart, utilization rates for both credit cards and home equity lines of credit are well below pre-pandemic averages.
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Lack of stress showing in delinquency data as well
Another way to look for signs of consumer stress is to look at the debt delinquency data. As of the first quarter, the NY Fed survey showed that the percent of loan balances that were more than 90 days delinquent was stable around 1.5%. That’s down from 1.9% a year ago, and quite a bit below the 3% average in 2019.
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Even third-party collections are at record lows, with just over 5% of consumers having collections against them as of the first quarter. This is down from 6% a year ago and below the 2019 average of 9.2%. The average collection amount per person is $1,316, which is lower than the $1,452 average in late 2019. This is surprising because just with inflation you’d have thought the amount would be higher.
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All in all, the data on consumer finances is not showing much cause for concern. So, count us in the “not worried” camp. At least, not yet.
Some Good Inflation News
While the market prices in a much higher likelihood of a rate hike at the June meeting, there was actually some decent news on the inflation front today. Starting with the Conference Board's Consumer Confidence report, in this month's update, the inflation expectations component fell to 6.1% from a peak of 7.9% fifteen months ago in March 2022 (first time reading touched 7.9%). Looking at the chart below, this reading was also at 6.1% fifteen months before that first peak. In other words, for all the talk about how inflation has been stickier, the pace of decline in this indicator on the way down has been the same as the pace of increase on the way up.
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Another notable report was today's release of the Dallas Fed Manufacturing report. The Prices Paid component of that report showed a decline from 19.5 down to 13.8 which was the lowest reading since July 2020. For the month of May, two of the five components (Empire and Philadelphia) showed modest m/m increases from multi-month lows, and three showed significant declines to multi-month lows. The chart below shows a composite of the Prices Paid component using the z-scores for each of the five individual components going back to 2010. The peak for this component was 19 months ago in November 2021. Unlike the inflation expectations of the Conference Board survey, this reading hasn't declined quite as fast as it increased in the 19 months leading up to the peak, but at -0.2, it is still below its historical average dating back to 2010 and back down to levels it was at right before the COVID shock hit the economy in early 2020.
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Home Prices Bounce in Hardest Hit Areas
March data on home prices across the country were released today with updated S&P CoreLogic Case Shiller numbers. Case Shiller home prices had been falling rapidly in many of the twenty cities tracked, but in March we actually saw a pretty big month-over-month bounce in some of the hardest-hit areas like San Diego, San Francisco, LA, Denver, and Phoenix. Some cities still saw declines, however. Las Vegas saw a m/m drop of 0.93%, while Miami fell 0.41%, and Seattle fell 0.28%.
On a year-over-year basis, Miami is still up the most with a gain of 10.86%. As shown in the table below, Miami home prices are up 59.87% from pre-COVID levels in February 2020, and they're only down 2.9% from post-COVID highs. Only Tampa is up more than Miami from pre-COVID levels (+61.04%), but Tampa prices are down more from their post-COVID highs (-4.70%) than Miami (-2.90%).
Four cities are down more than 10% from their post-COVID highs: San Diego (-10.12%), Las Vegas (-10.95%), San Francisco (-16.35%), and Seattle (-16.50%). New York is down the least from post-COVID highs of any city tracked at just -2.9%.
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Below we include charts of home price levels across all 20 cities tracked by Case Shiller along with the three composite indices. We've included a vertical red line on each chart to highlight pre-COVID levels. When looking through the charts, you can see this month's small bounce back in most cities after a 6-9 month pullback in prices from peaks seen early last year.
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Wednesday 6.7.23 Before Market Open:
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Thursday 6.8.23 Before Market Open:
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Thursday 6.8.23 After Market Close:
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(T.B.A. THIS WEEKEND.)
(T.B.A. THIS WEEKEND.) (T.B.A. THIS WEEKEND.).
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2023.06.02 23:35 bigbear0083 Wall Street Week Ahead for the trading week beginning June 5th, 2023
The Dow Jones Industrial Average surged Friday as traders cheered a strong jobs report and the passage of a debt ceiling bill that averts a U.S. default.
The 30-stock Dow jumped 701.19 points, or 2.12%, to end at 33,762.76 — its best day since January. The S&P 500 climbed 1.45% to close at 4,282.37. The Nasdaq Composite advanced 1.07% to 13,240.77, reaching its highest level since April 2022 during the session.
With Friday’s gains, the S&P 500 and Nasdaq finished the holiday-shortened trading week about 1.8% and 2% higher, respectively. The Dow’s Friday advance pushed it into positive territory for the week, finishing up around 2%. The Nasdaq notched its sixth straight week higher, a streak length not seen for the technology-heavy index since 2020.
Nonfarm payrolls grew much more than expected in May, rising 339,000. Economists polled by Dow Jones expected a relatively modest 190,000 increase. It marked the 29th straight month of positive job growth.
Recently strong employment data had been pressuring stocks on the notion it would keep the Federal Reserve raising interest rates. But Friday data also showed average hourly earnings rose less than economists expected year over year, while the unemployment rate was higher than anticipated.
Both data points have given investors hope that the Fed could pause its interest rate hike campaign at the policy meeting later this month, according to Terry Sandven, chief equity strategist at U.S. Bank Wealth Management.
“The so-called Goldilocks has entered the house,” Sandven said. “Clearly, on the bullish side, there are signs that inflation is starting to wane, speculation that the Fed is going to move into pause mode, increasing the likelihood of a soft landing.”
Easing concerns around the U.S. debt ceiling also helped sentiment. The Senate passed a bill to raise the debt ceiling late Thursday night, sending the bill to President Joe Biden’s desk. That comes after the House passed the Fiscal Responsibility Act on Wednesday, just days before the June 5 deadline set by U.S. Treasury Secretary Janet Yellen.
Lululemon shares popped more than 11% on strong results and a guidance boost, while MongoDB surged 28% on a blowout forecast.
A Resilient Labor Market = A Resilient Economy
Another month, another employment surprise. Should we be surprised anymore?
Economists expected payrolls to grow by about 187,000 in May. That’s still a solid job growth number, but a stepdown from what we’ve seen this year through April. However, actual payroll growth beat expectations for the 14th straight month.
The economy created 339,000 jobs in May, close to double expectations. Better still, payroll growth in March and April were revised higher by a total of 93,000!
- March payrolls were revised up by 52,000, from 165,000 to 217,000
- April payroll were revised up by 41,000, from 253,000 to 294,000
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We’ve got two months of payroll data since the Silicon Valley Bank crisis in March, and nothing suggests weakness arising from that banking crisis.
Over the first five months of the year, the economy’s added 1.5 million jobs. That in a nutshell tells you how the economy is doing. For perspective, the average annual payroll growth between 1940 and 2022 was 1.5 million. During the last expansion, 2010-2019, average annual payroll growth was 2.2 million per year.
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But what about the unemployment rate?
The unemployment rate did rise from a 50-year low of 3.4% to 3.7%. This does raise some cause for concern but digging through the data suggests it may be noise more than anything else.
It probably helps to understand that the job growth and unemployment rate data come from different sources. The former comes from asking about 120,000+ businesses how many people they hired. The latter comes from asking about 60,000 households about their employment status. No surprise, the latter is noisier.
A big reason for the weak household survey (and rising unemployment rate) is that more than 400,000 people who were self-employed said they were no longer employed. As you can see in the following chart this is very noisy data, but the recent trend seems to be toward lower self-employment. It’s basically reversing the surge we saw in 2021, when self-employment surged. So, what we’re seeing now may simply be normalization of the labor market as more workers move from self-employment to W2 jobs with an employer.
(CLICK HERE FOR THE CHART!)
Also, the unemployment rate can be impacted by people leaving the labor force (technically defined as those “not looking for work”) and an aging population. I’ve discussed in prior blogs how we can get around this by looking at the employment-population ratio for prime age workers, i.e. workers aged 25-54 years. This measures the number of people working as a percent of the civilian population. Think of it as the opposite of the unemployment rate, and because we use prime age, you also get around the demographic issue.
The good news is that the prime-age employment-population ratio dropped only a tick, from 80.8% to 80.7%. This still leaves it higher than at any point between 2002 and 2022.
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All in all, the labor market remains strong and resilient, despite all the recession calls. Perhaps its not as strong as the headline payroll growth number of 339,000 suggests, but any number above 150,000 would be good at this point. And we’re certainly well above that.
In fact, looking at the job growth and employment-population data, this labor market is probably the strongest we’ve seen since the late 1990’s. Our view since the end of last year has been that the economy can avoid a recession this year, and nothing we’ve seen to date suggests we need to reverse that view. Far from it.
June Better in Pre-Election Years
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Since 1971 June has shone brighter on NASDAQ stocks as a rule ranking eighth best with an 0.8% average gain, up 29 of 52 years. This contributes to NASDAQ’s “Best 8 Months” which ends in June. Small caps also fare well in June. Russell 2000 has averaged 0.6% in June since 1979 advancing 63.6% of the time.
June ranks near the bottom on the Dow Jones Industrials just above September since 1950 with an average loss of 0.2%. S&P 500 performs similarly poorly, ranking ninth, but essentially flat (0.02% average gain).
Despite being much stronger S&P 500 pre-election year June ranks fifth best. For the rest it is just sixth best. Average monthly gains in pre-election year June range from DJIA 1.1% to a respectable 2.4% for NASDAQ. Russell 2000 has been the most consistently bullish in pre-election years, up 8 of the last 11 (72.7% of the time).
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The June Swoon?
Stocks did it again, as the S&P 500 gained 0.2% in the month of May, making it now 10 of the past 11 years that stocks finished green in May. Of course, it gained only 0.01% last year and only 0.25% this year, so the recent returns weren’t off the charts by any measure.
Looking specifically at this year, tech added more than 9% in May, thanks to excitement over AI and Nvidia, with communication services and consumer discretionary also in the green, while the other eight sectors were lower.
Specifically, turning to the month of June, stocks historically have hit a bit of trouble here. Since 1950, up 0.03% on average, the fourth worst month of the year. Over the past 20 years, only January and September have been worse and in the past decade, it is again the fourth worst month. The one bit of good news is during a pre-election year is it up 1.5%, the fifth-best month of the year.
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Here’s another chart we’ve shared before, but years that gained big in January (like 2023) tend to see some periods of consolidation in late May/early June, but eventually experience a surge higher into July. Given the flattish overall May, this could be playing out again.
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What if stocks were having a good year heading into June? Since 1950, if the S&P 500 was up more than 8% for the year going into June (like this year), the month of June was up an impressive 1.2% on average versus the average June return of 0.03%, while in a pre-election year the returns jumped to 1.8%. The percent of the time where returns were higher gets better as well, from 54.8% in your average June to nearly 74% if up 8% or more for the year heading into June, to 80% of the time higher if up 8% for the year in a pre-election year.
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Overall, it has been a very nice run for stocks this year and we remain overweight stocks in the Carson Investment Research House Views. June could potentially cause some volatility, but when all is said and done, we wouldn’t bet against more strength and higher prices in June.
NASDAQ and Russell 2000 Lead June Pre-Election Strength
Over the last 21 years, June has been a rather lackluster month. DJIA, S&P 500 and Russell 1000 have all recorded average losses in the month. Russell 2000 has fared better with a modest average gain. Historically the month has opened respectably, advancing on the first and second trading days.
From there the market then drifted sideways and lower into negative territory just ahead of mid-month. Here the market rallied to create a nice mid-month bulge that quickly evaporated and returned to losses. The brisk, post, mid-month drop is typically followed by a month end rally led by technology and small caps.
Historical performance in pre-election years has been much stronger with all five indexes finishing with average gains. June’s overall pattern in pre-election is similar to the last 21-years pattern with a brief, shallow pullback after a solid start.
In pre-election years the mid-month rally has been much more robust beginning around the sixth trading day and lasting until the fifteenth. Followed by another modest retreat and rally into the end of Q2.
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May and YTD 2023 Asset Class Performance
May 2023 is now behind us, and below is a look at how various asset classes performed during the month using US-listed exchange-traded products as proxies. We also include YTD and YoY total returns.
May was a month of divergence where Tech/AI soared, and the rest of the market fell. Notably, the Nasdaq 100 ETF (QQQ) gained 7.88% in May while the Dow Jones Dividend ETF (DVY) fell 7.7%. That's a 15 percentage-point spread!
At the sector level, it was a similar story. While the Tech sector (XLK) rose 8.9%, sectors like Energy (XLE), Consumer Staples (XLP), Materials (XLB), and Utilities (XLU) fell more than 5%. In total, 8 of 11 sectors were in the red for the month.
Outside the US, we saw pullbacks in most areas of the world other than Brazil, India, and Japan. China, Hong Kong, France, Canada, Italy, Spain, and the UK all fell more than 5%.
All of the commodity-related ETFs/ETNs were in the red for May, with oil (USO) and natural gas (UNG) falling the most at more than 10% each.
Finally, fixed-income ETFs also fell in May as interest rates bounced back. The aggregate bond market ETF (AGG) was down 1.14% in May, leaving it up just 2.6% YTD and down 2.2% year-over-year.
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How Worried Should We Be About Consumer Debt?
A very common question we get these days is whether we’re concerned about the massive increase in consumer debt.
Short answer: No. Well, not yet anyway. But let’s walk through it in 6 charts.
The New York Federal Reserve (NY Fed) releases a quarterly report on household debt and credit, and the latest one that was released last week came with the headline:
“Household Debt Hits $17.05 Trillion in First Quarter.” But let’s look at the details. Household debt increased by $148 billion in Q1. That translates to a 0.9% increase, which is the slowest quarterly increase in two years. Most of the increase in debt was from mortgage originations ($121 billion) – mortgage debt makes up $12 trillion of the total $17 trillion in debt. The rest was auto loan and student loan balances.
Here’s something interesting: credit card balances were flat in Q1, at $986 billion. The fact that overall balances are higher than where they were in 2019 ($927 billion) should not be surprising given we just experienced a lot of inflation. Prices rose at the fastest pace in 40 years, and so you should expect card balances to increase. However, incomes rose as well.
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When you think debt, the key question is whether households are able to service that debt. A good measure of that is to look at debt service costs as a percent of disposable income. As of Q4 2022, that’s at 9.7%, slightly lower than what it was before the pandemic and well below the historical average.
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There’s even better news: disposable income grew 2.9% in the first quarter of 2023. Significantly higher than the 0.9% increase in total household debt, let alone interest costs!
Part of that includes the large boost to social security income due to inflation adjustments in January. Also, tax brackets were adjusted higher, resulting in more money in household wallets.
But even if you exclude these one-off increases, disposable income growth has been strong between February and April, rising at a 5% annualized pace. In fact, employee compensation by itself has risen at a 3.9% annualized pace over the past three months. Meanwhile, inflation is running just about 3% – which means households are seeing real income gains (adjusted for inflation).
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This is why consumers don’t feel the need to borrow to the extent they did before the pandemic. Credit utilization rates measure credit card balances as a percent of available credit. As you can see in the following chart, utilization rates for both credit cards and home equity lines of credit are well below pre-pandemic averages.
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Lack of stress showing in delinquency data as well
Another way to look for signs of consumer stress is to look at the debt delinquency data. As of the first quarter, the NY Fed survey showed that the percent of loan balances that were more than 90 days delinquent was stable around 1.5%. That’s down from 1.9% a year ago, and quite a bit below the 3% average in 2019.
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Even third-party collections are at record lows, with just over 5% of consumers having collections against them as of the first quarter. This is down from 6% a year ago and below the 2019 average of 9.2%. The average collection amount per person is $1,316, which is lower than the $1,452 average in late 2019. This is surprising because just with inflation you’d have thought the amount would be higher.
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All in all, the data on consumer finances is not showing much cause for concern. So, count us in the “not worried” camp. At least, not yet.
Some Good Inflation News
While the market prices in a much higher likelihood of a rate hike at the June meeting, there was actually some decent news on the inflation front today. Starting with the Conference Board's Consumer Confidence report, in this month's update, the inflation expectations component fell to 6.1% from a peak of 7.9% fifteen months ago in March 2022 (first time reading touched 7.9%). Looking at the chart below, this reading was also at 6.1% fifteen months before that first peak. In other words, for all the talk about how inflation has been stickier, the pace of decline in this indicator on the way down has been the same as the pace of increase on the way up.
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Another notable report was today's release of the Dallas Fed Manufacturing report. The Prices Paid component of that report showed a decline from 19.5 down to 13.8 which was the lowest reading since July 2020. For the month of May, two of the five components (Empire and Philadelphia) showed modest m/m increases from multi-month lows, and three showed significant declines to multi-month lows. The chart below shows a composite of the Prices Paid component using the z-scores for each of the five individual components going back to 2010. The peak for this component was 19 months ago in November 2021. Unlike the inflation expectations of the Conference Board survey, this reading hasn't declined quite as fast as it increased in the 19 months leading up to the peak, but at -0.2, it is still below its historical average dating back to 2010 and back down to levels it was at right before the COVID shock hit the economy in early 2020.
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Home Prices Bounce in Hardest Hit Areas
March data on home prices across the country were released today with updated S&P CoreLogic Case Shiller numbers. Case Shiller home prices had been falling rapidly in many of the twenty cities tracked, but in March we actually saw a pretty big month-over-month bounce in some of the hardest-hit areas like San Diego, San Francisco, LA, Denver, and Phoenix. Some cities still saw declines, however. Las Vegas saw a m/m drop of 0.93%, while Miami fell 0.41%, and Seattle fell 0.28%.
On a year-over-year basis, Miami is still up the most with a gain of 10.86%. As shown in the table below, Miami home prices are up 59.87% from pre-COVID levels in February 2020, and they're only down 2.9% from post-COVID highs. Only Tampa is up more than Miami from pre-COVID levels (+61.04%), but Tampa prices are down more from their post-COVID highs (-4.70%) than Miami (-2.90%).
Four cities are down more than 10% from their post-COVID highs: San Diego (-10.12%), Las Vegas (-10.95%), San Francisco (-16.35%), and Seattle (-16.50%). New York is down the least from post-COVID highs of any city tracked at just -2.9%.
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Below we include charts of home price levels across all 20 cities tracked by Case Shiller along with the three composite indices. We've included a vertical red line on each chart to highlight pre-COVID levels. When looking through the charts, you can see this month's small bounce back in most cities after a 6-9 month pullback in prices from peaks seen early last year.
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(*T.B.A. THIS WEEKEND.)
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Friday 6.9.23 Before Market Open:
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(T.B.A. THIS WEEKEND.)
(T.B.A. THIS WEEKEND.) (T.B.A. THIS WEEKEND.).
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2023.06.02 23:33 bigbear0083 Wall Street Week Ahead for the trading week beginning June 5th, 2023
The Dow Jones Industrial Average surged Friday as traders cheered a strong jobs report and the passage of a debt ceiling bill that averts a U.S. default.
The 30-stock Dow jumped 701.19 points, or 2.12%, to end at 33,762.76 — its best day since January. The S&P 500 climbed 1.45% to close at 4,282.37. The Nasdaq Composite advanced 1.07% to 13,240.77, reaching its highest level since April 2022 during the session.
With Friday’s gains, the S&P 500 and Nasdaq finished the holiday-shortened trading week about 1.8% and 2% higher, respectively. The Dow’s Friday advance pushed it into positive territory for the week, finishing up around 2%. The Nasdaq notched its sixth straight week higher, a streak length not seen for the technology-heavy index since 2020.
Nonfarm payrolls grew much more than expected in May, rising 339,000. Economists polled by Dow Jones expected a relatively modest 190,000 increase. It marked the 29th straight month of positive job growth.
Recently strong employment data had been pressuring stocks on the notion it would keep the Federal Reserve raising interest rates. But Friday data also showed average hourly earnings rose less than economists expected year over year, while the unemployment rate was higher than anticipated.
Both data points have given investors hope that the Fed could pause its interest rate hike campaign at the policy meeting later this month, according to Terry Sandven, chief equity strategist at U.S. Bank Wealth Management.
“The so-called Goldilocks has entered the house,” Sandven said. “Clearly, on the bullish side, there are signs that inflation is starting to wane, speculation that the Fed is going to move into pause mode, increasing the likelihood of a soft landing.”
Easing concerns around the U.S. debt ceiling also helped sentiment. The Senate passed a bill to raise the debt ceiling late Thursday night, sending the bill to President Joe Biden’s desk. That comes after the House passed the Fiscal Responsibility Act on Wednesday, just days before the June 5 deadline set by U.S. Treasury Secretary Janet Yellen.
Lululemon shares popped more than 11% on strong results and a guidance boost, while MongoDB surged 28% on a blowout forecast.
A Resilient Labor Market = A Resilient Economy
Another month, another employment surprise. Should we be surprised anymore?
Economists expected payrolls to grow by about 187,000 in May. That’s still a solid job growth number, but a stepdown from what we’ve seen this year through April. However, actual payroll growth beat expectations for the 14th straight month.
The economy created 339,000 jobs in May, close to double expectations. Better still, payroll growth in March and April were revised higher by a total of 93,000!
- March payrolls were revised up by 52,000, from 165,000 to 217,000
- April payroll were revised up by 41,000, from 253,000 to 294,000
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We’ve got two months of payroll data since the Silicon Valley Bank crisis in March, and nothing suggests weakness arising from that banking crisis.
Over the first five months of the year, the economy’s added 1.5 million jobs. That in a nutshell tells you how the economy is doing. For perspective, the average annual payroll growth between 1940 and 2022 was 1.5 million. During the last expansion, 2010-2019, average annual payroll growth was 2.2 million per year.
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But what about the unemployment rate?
The unemployment rate did rise from a 50-year low of 3.4% to 3.7%. This does raise some cause for concern but digging through the data suggests it may be noise more than anything else.
It probably helps to understand that the job growth and unemployment rate data come from different sources. The former comes from asking about 120,000+ businesses how many people they hired. The latter comes from asking about 60,000 households about their employment status. No surprise, the latter is noisier.
A big reason for the weak household survey (and rising unemployment rate) is that more than 400,000 people who were self-employed said they were no longer employed. As you can see in the following chart this is very noisy data, but the recent trend seems to be toward lower self-employment. It’s basically reversing the surge we saw in 2021, when self-employment surged. So, what we’re seeing now may simply be normalization of the labor market as more workers move from self-employment to W2 jobs with an employer.
(CLICK HERE FOR THE CHART!)
Also, the unemployment rate can be impacted by people leaving the labor force (technically defined as those “not looking for work”) and an aging population. I’ve discussed in prior blogs how we can get around this by looking at the employment-population ratio for prime age workers, i.e. workers aged 25-54 years. This measures the number of people working as a percent of the civilian population. Think of it as the opposite of the unemployment rate, and because we use prime age, you also get around the demographic issue.
The good news is that the prime-age employment-population ratio dropped only a tick, from 80.8% to 80.7%. This still leaves it higher than at any point between 2002 and 2022.
(CLICK HERE FOR THE CHART!)
All in all, the labor market remains strong and resilient, despite all the recession calls. Perhaps its not as strong as the headline payroll growth number of 339,000 suggests, but any number above 150,000 would be good at this point. And we’re certainly well above that.
In fact, looking at the job growth and employment-population data, this labor market is probably the strongest we’ve seen since the late 1990’s. Our view since the end of last year has been that the economy can avoid a recession this year, and nothing we’ve seen to date suggests we need to reverse that view. Far from it.
June Better in Pre-Election Years
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Since 1971 June has shone brighter on NASDAQ stocks as a rule ranking eighth best with an 0.8% average gain, up 29 of 52 years. This contributes to NASDAQ’s “Best 8 Months” which ends in June. Small caps also fare well in June. Russell 2000 has averaged 0.6% in June since 1979 advancing 63.6% of the time.
June ranks near the bottom on the Dow Jones Industrials just above September since 1950 with an average loss of 0.2%. S&P 500 performs similarly poorly, ranking ninth, but essentially flat (0.02% average gain).
Despite being much stronger S&P 500 pre-election year June ranks fifth best. For the rest it is just sixth best. Average monthly gains in pre-election year June range from DJIA 1.1% to a respectable 2.4% for NASDAQ. Russell 2000 has been the most consistently bullish in pre-election years, up 8 of the last 11 (72.7% of the time).
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The June Swoon?
Stocks did it again, as the S&P 500 gained 0.2% in the month of May, making it now 10 of the past 11 years that stocks finished green in May. Of course, it gained only 0.01% last year and only 0.25% this year, so the recent returns weren’t off the charts by any measure.
Looking specifically at this year, tech added more than 9% in May, thanks to excitement over AI and Nvidia, with communication services and consumer discretionary also in the green, while the other eight sectors were lower.
Specifically, turning to the month of June, stocks historically have hit a bit of trouble here. Since 1950, up 0.03% on average, the fourth worst month of the year. Over the past 20 years, only January and September have been worse and in the past decade, it is again the fourth worst month. The one bit of good news is during a pre-election year is it up 1.5%, the fifth-best month of the year.
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Here’s another chart we’ve shared before, but years that gained big in January (like 2023) tend to see some periods of consolidation in late May/early June, but eventually experience a surge higher into July. Given the flattish overall May, this could be playing out again.
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What if stocks were having a good year heading into June? Since 1950, if the S&P 500 was up more than 8% for the year going into June (like this year), the month of June was up an impressive 1.2% on average versus the average June return of 0.03%, while in a pre-election year the returns jumped to 1.8%. The percent of the time where returns were higher gets better as well, from 54.8% in your average June to nearly 74% if up 8% or more for the year heading into June, to 80% of the time higher if up 8% for the year in a pre-election year.
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Overall, it has been a very nice run for stocks this year and we remain overweight stocks in the Carson Investment Research House Views. June could potentially cause some volatility, but when all is said and done, we wouldn’t bet against more strength and higher prices in June.
NASDAQ and Russell 2000 Lead June Pre-Election Strength
Over the last 21 years, June has been a rather lackluster month. DJIA, S&P 500 and Russell 1000 have all recorded average losses in the month. Russell 2000 has fared better with a modest average gain. Historically the month has opened respectably, advancing on the first and second trading days.
From there the market then drifted sideways and lower into negative territory just ahead of mid-month. Here the market rallied to create a nice mid-month bulge that quickly evaporated and returned to losses. The brisk, post, mid-month drop is typically followed by a month end rally led by technology and small caps.
Historical performance in pre-election years has been much stronger with all five indexes finishing with average gains. June’s overall pattern in pre-election is similar to the last 21-years pattern with a brief, shallow pullback after a solid start.
In pre-election years the mid-month rally has been much more robust beginning around the sixth trading day and lasting until the fifteenth. Followed by another modest retreat and rally into the end of Q2.
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May and YTD 2023 Asset Class Performance
May 2023 is now behind us, and below is a look at how various asset classes performed during the month using US-listed exchange-traded products as proxies. We also include YTD and YoY total returns.
May was a month of divergence where Tech/AI soared, and the rest of the market fell. Notably, the Nasdaq 100 ETF (QQQ) gained 7.88% in May while the Dow Jones Dividend ETF (DVY) fell 7.7%. That's a 15 percentage-point spread!
At the sector level, it was a similar story. While the Tech sector (XLK) rose 8.9%, sectors like Energy (XLE), Consumer Staples (XLP), Materials (XLB), and Utilities (XLU) fell more than 5%. In total, 8 of 11 sectors were in the red for the month.
Outside the US, we saw pullbacks in most areas of the world other than Brazil, India, and Japan. China, Hong Kong, France, Canada, Italy, Spain, and the UK all fell more than 5%.
All of the commodity-related ETFs/ETNs were in the red for May, with oil (USO) and natural gas (UNG) falling the most at more than 10% each.
Finally, fixed-income ETFs also fell in May as interest rates bounced back. The aggregate bond market ETF (AGG) was down 1.14% in May, leaving it up just 2.6% YTD and down 2.2% year-over-year.
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How Worried Should We Be About Consumer Debt?
A very common question we get these days is whether we’re concerned about the massive increase in consumer debt.
Short answer: No. Well, not yet anyway. But let’s walk through it in 6 charts.
The New York Federal Reserve (NY Fed) releases a quarterly report on household debt and credit, and the latest one that was released last week came with the headline:
“Household Debt Hits $17.05 Trillion in First Quarter.” But let’s look at the details. Household debt increased by $148 billion in Q1. That translates to a 0.9% increase, which is the slowest quarterly increase in two years. Most of the increase in debt was from mortgage originations ($121 billion) – mortgage debt makes up $12 trillion of the total $17 trillion in debt. The rest was auto loan and student loan balances.
Here’s something interesting: credit card balances were flat in Q1, at $986 billion. The fact that overall balances are higher than where they were in 2019 ($927 billion) should not be surprising given we just experienced a lot of inflation. Prices rose at the fastest pace in 40 years, and so you should expect card balances to increase. However, incomes rose as well.
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When you think debt, the key question is whether households are able to service that debt. A good measure of that is to look at debt service costs as a percent of disposable income. As of Q4 2022, that’s at 9.7%, slightly lower than what it was before the pandemic and well below the historical average.
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There’s even better news: disposable income grew 2.9% in the first quarter of 2023. Significantly higher than the 0.9% increase in total household debt, let alone interest costs!
Part of that includes the large boost to social security income due to inflation adjustments in January. Also, tax brackets were adjusted higher, resulting in more money in household wallets.
But even if you exclude these one-off increases, disposable income growth has been strong between February and April, rising at a 5% annualized pace. In fact, employee compensation by itself has risen at a 3.9% annualized pace over the past three months. Meanwhile, inflation is running just about 3% – which means households are seeing real income gains (adjusted for inflation).
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This is why consumers don’t feel the need to borrow to the extent they did before the pandemic. Credit utilization rates measure credit card balances as a percent of available credit. As you can see in the following chart, utilization rates for both credit cards and home equity lines of credit are well below pre-pandemic averages.
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Lack of stress showing in delinquency data as well
Another way to look for signs of consumer stress is to look at the debt delinquency data. As of the first quarter, the NY Fed survey showed that the percent of loan balances that were more than 90 days delinquent was stable around 1.5%. That’s down from 1.9% a year ago, and quite a bit below the 3% average in 2019.
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Even third-party collections are at record lows, with just over 5% of consumers having collections against them as of the first quarter. This is down from 6% a year ago and below the 2019 average of 9.2%. The average collection amount per person is $1,316, which is lower than the $1,452 average in late 2019. This is surprising because just with inflation you’d have thought the amount would be higher.
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All in all, the data on consumer finances is not showing much cause for concern. So, count us in the “not worried” camp. At least, not yet.
Some Good Inflation News
While the market prices in a much higher likelihood of a rate hike at the June meeting, there was actually some decent news on the inflation front today. Starting with the Conference Board's Consumer Confidence report, in this month's update, the inflation expectations component fell to 6.1% from a peak of 7.9% fifteen months ago in March 2022 (first time reading touched 7.9%). Looking at the chart below, this reading was also at 6.1% fifteen months before that first peak. In other words, for all the talk about how inflation has been stickier, the pace of decline in this indicator on the way down has been the same as the pace of increase on the way up.
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Another notable report was today's release of the Dallas Fed Manufacturing report. The Prices Paid component of that report showed a decline from 19.5 down to 13.8 which was the lowest reading since July 2020. For the month of May, two of the five components (Empire and Philadelphia) showed modest m/m increases from multi-month lows, and three showed significant declines to multi-month lows. The chart below shows a composite of the Prices Paid component using the z-scores for each of the five individual components going back to 2010. The peak for this component was 19 months ago in November 2021. Unlike the inflation expectations of the Conference Board survey, this reading hasn't declined quite as fast as it increased in the 19 months leading up to the peak, but at -0.2, it is still below its historical average dating back to 2010 and back down to levels it was at right before the COVID shock hit the economy in early 2020.
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Home Prices Bounce in Hardest Hit Areas
March data on home prices across the country were released today with updated S&P CoreLogic Case Shiller numbers. Case Shiller home prices had been falling rapidly in many of the twenty cities tracked, but in March we actually saw a pretty big month-over-month bounce in some of the hardest-hit areas like San Diego, San Francisco, LA, Denver, and Phoenix. Some cities still saw declines, however. Las Vegas saw a m/m drop of 0.93%, while Miami fell 0.41%, and Seattle fell 0.28%.
On a year-over-year basis, Miami is still up the most with a gain of 10.86%. As shown in the table below, Miami home prices are up 59.87% from pre-COVID levels in February 2020, and they're only down 2.9% from post-COVID highs. Only Tampa is up more than Miami from pre-COVID levels (+61.04%), but Tampa prices are down more from their post-COVID highs (-4.70%) than Miami (-2.90%).
Four cities are down more than 10% from their post-COVID highs: San Diego (-10.12%), Las Vegas (-10.95%), San Francisco (-16.35%), and Seattle (-16.50%). New York is down the least from post-COVID highs of any city tracked at just -2.9%.
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Below we include charts of home price levels across all 20 cities tracked by Case Shiller along with the three composite indices. We've included a vertical red line on each chart to highlight pre-COVID levels. When looking through the charts, you can see this month's small bounce back in most cities after a 6-9 month pullback in prices from peaks seen early last year.
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($NIO $GTLB $GME $CIEN $DOCU $SAIC $ASO $SJM $CXM $THO $OLLI $MOMO $CBRL $FERG $TTC $HQY $CPB $PLAY $QMCO $FCEL $LOVE $ABM $CNM $HTOO $TCOM $JOAN $UNFI $SFIX $CHS $GIII $SIG $SMAR $PL $ZFOX $HYZN $VRA $CASY $MTN $SMTC $ALYA $DBI $SCWX $JILL $OESX $BSE $REVG $VBNK $VRNT $RENT $HCP)
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Monday 6.5.23 Before Market Open:
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Friday 6.9.23 Before Market Open:
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(T.B.A. THIS WEEKEND.)
(T.B.A. THIS WEEKEND.) (T.B.A. THIS WEEKEND.).
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2023.06.02 22:33 kaozennrk Is Fresh Water Swimming Generally Safe or Not?