DHunplugged #705: Sinkholes Forming

DHUnplugged Podcast

Sinkholes forming

Memes again – Huge Moves

Economy starting to stall

Face Ripper moves into the close

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

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

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

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

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

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

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

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

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

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

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

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

Emerging Markets
- We have been "constructive" on this area
- Almost half of the companies have missed analyst estimates, average profits have slumped 10% compared with the prior-year period and for every dollar of predicted earnings, companies are bringing home only 86 cents.
- Looks like at an inflection point -
- Two years ago most EM companies beat earnings by a wide margin (stocks didn't follow)

France - Rating
- Standard & Poor's (S&P) decision to downgrade its rating on France's sovereign debt should in the short term deliver more political sting than pain in financial markets.
- Days ahead of a June 9 EU parliamentary election, S&P cut France's long-term sovereign debt rating on Friday to "AA-" from "AA", citing expectations that higher than expected deficits would push up debt in the euro zone's second-biggest economy.

Boeing
- Fitch Ratings lowered its 2024 forecasts for Boeing's aircraft delivery and free cash flow on Friday as the planemaker grapples with investigations and slumping production of its strongest-selling jet.
- China also a problem halting some orders
- Meanwhile - stock up on Monday on this news"
- Still - only one of 2 global planemakers and the only one in USA

More Boeing
- A second attempt at launching Boeing's new Starliner space capsule on its inaugural test flight with NASA astronauts on board was automatically halted with minutes to go before liftoff by a computer-abort system, mission officials said.
- The scrubbed launch, capping a string of 11th-hour technical issues that ground teams worked through and resolved earlier in the countdown, adds another indefinite delay for the highly anticipated and much-delayed test flight.

Guilty Verdict Pays
- The Trump campaign said Friday it nearly doubled its single-day fundraising record after a New York jury found Donald Trump guilty in his criminal hush money trial.
- The Republican’s campaign said it raised $34.8 million from small-dollar donors in less than seven hours following the historic verdict Thursday afternoon that convicted the former president of 34 counts of falsifying business records.

What is With Jeans?
- GAP rose nearly 30% post earnings
- the apparel company lifted its full-year operating income forecast on the heels of a first-quarter earnings beat. Gap executives now expect operating income to grow roughly 40%, compared with a previous estimate that called for low-to-mid teens expansion.
- We also saw a similar move for ANF - Abercrombie & Fitch

Proves the Point
- Give out FREE or CHEAP Money :
- Royal Caribbean +2.2% cruising to a new all-time high today; stock has been in a steady uptrend since late October
- HUGE debt load -

Roaring Kitty
- Posted screenshot of his holdings - Supposedly, he still owned 5 million shares of GameStop and 120,000 call options with a strike price of $20 that expire on June 21, the screenshot showed.
- Stock went up as much as 80% Monday
- Profit of $25M in one day?
- NOW E-trade looking to ban his account from trading on their platform - what gives?

NYSE Glitch
- Share of Bershire hataway seems to loose 99% of its value on Monday - but is was a mere glitch

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FED AND CRYPTO LIMERICKS

JCD Score ()

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See this week’s stock picks HERE

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