02 Jul JUNE’S UNEMPLOYMENT DATA AT 8:30…LEGISLATURES CHALLENGING ESG INVESTING…ROBINHOOD AND DOGECOIN
Yesterday I referenced one measure utilized by JP Morgan that value’s performance in June was the worst monthly performance as compared to growth since August 2000. Yesterday value came surging back with every S & P 500 group up for the exception of technology (aka growth), an event that has only happened twice in the proceeding 12 months according to Bloomberg.
The reason for the massive rotation—a strong batch of economic reports. The Manufacturing sector is expanding robustly albeit the ISM did miss expectations, primarily the result of bottlenecks. The prices paid component however hit a 42-year high, partially the result of these bottlenecks and great demand.
Weekly jobless claims fell to a fresh pandemic low as claims were lower than anticipated.
Speaking of jobs, June’s employment data is released at 8:30. Non-farm and private sector payrolls are expected to increase by 720,000 and 615,000, respectively. A 5.6% unemployment rate, a 3.6% increase average a hourly earnings, a 34.9 average work week and a 61.7% labor participation rate (LPR).
As widely known, the Federal Reserve has adamantly stated inflation is transitory, partially from the upcoming expiry of enhanced unemployment benefits that has temporarily reduced the supply of labor as over 53% of workers receiving these benefits are making more money not to work rather than to work.
The Committee believes when these worker’s re enter the workforce in September, labor prices (and inflation) will subside.
As noted yesterday, twenty-six states have already discontinued these extended benefits. How will such be reflected in the data? Will it validate or nullify the Fed’s views?
Changing topics, several lawmakers are “slamming” BlackRock and StateStreet against the rise of ESG trading in retirement portfolios and the roles these gargantuan money managers exert in exercising shareholder rights on behalf of millions of American investors.
The legislators are accusing both leviathans of placing their needs, desires, and economic interests ahead of their clients, a view easily supported by letters to the companies that they own (which is about 15% of every member of the S & P 500), public statements made by their respective corporate chieftains, and the firm’s investing banking activities.
As noted several weeks ago, the Biden Administration issued an executive order that lowered the fiduciary standard for ESG investing, a point challenged by both Senator Toomey and Senator Johnson stating that financial security of millions of Americans is being threatened given the vast majority of projects at this juncture lack financial viability.
Wow! How will this unfold? Will yesterday’s comments about the Robinhood settlement become prophetic?
Speaking of Robinhood, Robinhood reported yesterday that 17% of its transaction-based revenue in the first quarter came from cryptocurrencies, up from just 3% in the same period of 2020. Thirty four percent of that came from the trading of Dogecoin, a crypto that originated as a joke and has no perceived value.
What is this suggesting?
Last night the foreign markets were mixed. London was up 0.17%, Paris up 0.03% and Frankfurt up 0.37%. China was down 1.95%, Japan up 0.27% and Hang Seng down 1.80%.
The Dow should open flat but this could change radically if the 8:30 data sharply differs from expectations. The 10-year is up 5/32 to yield 1.45%. Oil is steady at $75/barrel, the highest level since 2018.