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Fireworks. · ANGLES.

• 0:01
  SPEAKER_00: Fireworks, my weekly market review, July 7th, 2024.
• 0:05
  SPEAKER_00: Following the car crash of a presidential debate and an apparent outbreak of civil
• 0:12
  SPEAKER_00: war in the Democratic Party,
• 0:14
  SPEAKER_00: Wall Street strategists and traders have already begun gaming out how an
• 0:18
  SPEAKER_00: increasingly likely Trump victory in November will look,
• 0:22
  SPEAKER_00: especially as it was further enhanced by Monday's Supreme Court decision on
• 0:27
  SPEAKER_00: presidential immunity.
• 0:29
  SPEAKER_00: As one analyst put it,
• 0:31
  SPEAKER_00: it's still too soon to fully price in an election outcome,
• 0:35
  SPEAKER_00: but probably not too early to leg into it.
• 0:39
  SPEAKER_00: The sense is that a second Trump presidency would drive market interest rates higher,
• 0:44
  SPEAKER_00: on the back of the prospect of the widespread imposition of international tariffs
• 0:49
  SPEAKER_00: feeding stagflation in the US,
• 0:52
  SPEAKER_00: anticipated ballooning deficits,
• 0:55
  SPEAKER_00: and a president apparently intent on directly interfering in Fed interest rate policy.
• 1:02
  SPEAKER_00: The third quarter and second half began with a holiday-interrupted week on Monday
• 1:08
  SPEAKER_00: and a return to what we've seen a lot of recently,
• 1:11
  SPEAKER_00: mega-tech performance papering over the cracks in the rest of the market.
• 1:16
  SPEAKER_00: On the same day that the tech-heavy Nasdaq reached a new all-time record,
• 1:21
  SPEAKER_00: three-quarters of the stocks in the S&P 500 moved lower.
• 1:26
  SPEAKER_00: As U.S.
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  SPEAKER_00: markets opened on Tuesday,
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  SPEAKER_00: the backdrop was rather miserable,
• 1:30
  SPEAKER_00: with European markets tumbling and oil prices near multi-month highs amid
• 1:36
  SPEAKER_00: escalating tensions in the Middle East and hurricanes in the Atlantic,
• 1:41
  SPEAKER_00: where Hurricane Beryl became the earliest ever Category 5 storm in the area.
• 1:48
  SPEAKER_00: The Job Openings and Labor Turnover Survey, JALTS,
• 1:52
  SPEAKER_00: showed open job positions increased 8.14 million from a downwardly revised 7.92
• 1:59
  SPEAKER_00: million reading in the prior month.
• 2:03
  SPEAKER_00: That was somewhat higher than expected and could therefore be perceived as a small
• 2:08
  SPEAKER_00: speed bump on the road to imminent interest rate cuts.
• 2:12
  SPEAKER_00: However,
• 2:13
  SPEAKER_00: mega tech continued to backstop the rest of the market and indexes moved moderately
• 2:18
  SPEAKER_00: higher with the S&P 500 and NASDAQ both closing once again at all time record highs
• 2:25
  SPEAKER_00: in a low volume session that had one eye on Friday's critical jobs report.
• 2:32
  SPEAKER_00: Wednesday was a half day in advance of the July 4th holiday,
• 2:36
  SPEAKER_00: and the focus remained on the potential back-to-back fireworks,
• 2:41
  SPEAKER_00: real ones at the following day's celebrations,
• 2:43
  SPEAKER_00: and then possible metaphorical ones with Friday's employment info.
• 2:49
  SPEAKER_00: Predictably,
• 2:49
  SPEAKER_00: the abbreviated session was something of a snoozer,
• 2:53
  SPEAKER_00: but even that couldn't prevent marginal new record highs being reached yet again.
• 2:59
  SPEAKER_00: Following Thursday's holiday,
• 3:01
  SPEAKER_00: during which there was a strong intensification of the doubts surrounding Biden's
• 3:05
  SPEAKER_00: viability as a realistic presidential candidate,
• 3:09
  SPEAKER_00: Wall Street trading desks operated with mostly skeleton crews on Friday,
• 3:14
  SPEAKER_00: even though probably the most important economic data point of the month,
• 3:18
  SPEAKER_00: the jobs report,
• 3:20
  SPEAKER_00: was released before the opening bell.
• 3:23
  SPEAKER_00: We learned that the US added another 206,000 jobs last month,
• 3:28
  SPEAKER_00: a bit more than had been expected,
• 3:30
  SPEAKER_00: but there was a downward revision for the two previous months.
• 3:34
  SPEAKER_00: The revisions helped bring the three-month average down to 177,000 new jobs created
• 3:41
  SPEAKER_00: per month,
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  SPEAKER_00: the slowest pace of job growth since January 2021 by that measure.
• 3:49
  SPEAKER_00: The rate of unemployment,
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  SPEAKER_00: slightly surprisingly,
• 3:51
  SPEAKER_00: ticked up to 4.1%,
• 3:55
  SPEAKER_00: and the average hourly earnings were up 3.9% in June from a year earlier,
• 4:01
  SPEAKER_00: marking their smallest gain since 2021.
• 4:05
  SPEAKER_00: This all seems to have confirmed Wall Street's view that the economy is slowing,
• 4:10
  SPEAKER_00: but not in a drastic way that would prompt more aggressive rate cuts.
• 4:15
  SPEAKER_00: A hot labor market makes it more difficult to lower interest rates,
• 4:19
  SPEAKER_00: but there likely wasn't anything in the report to lead Fed officials to push for a
• 4:24
  SPEAKER_00: July rate cut.
• 4:26
  SPEAKER_00: September, however, is still very much on the table.
• 4:31
  SPEAKER_00: Friday's thinly populated stock market was moderately impressed,
• 4:35
  SPEAKER_00: and we saw a Goldilocks extension of the rally on rising hopes of that September
• 4:41
  SPEAKER_00: rate cut.
• 4:42
  SPEAKER_00: which of course generated more new record highs for the S&P 500 and NASDAQ.
• 4:48
  SPEAKER_00: Attention turned towards a potentially consequential upcoming several days in U.S.
• 4:53
  SPEAKER_00: politics,
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  SPEAKER_00: with a Biden ABC interview airing that night and an apparently growing group of
• 4:59
  SPEAKER_00: Democratic lawmakers,
• 5:01
  SPEAKER_00: donors and party activists getting louder and louder about the need for a change of candidate,
• 5:07
  SPEAKER_00: especially as more states now seem poised to slip into battleground territory.
• 5:14
  SPEAKER_00: Electoral politics was also rumbling in the background elsewhere in the world,
• 5:19
  SPEAKER_00: and I've got more details about those in my report.
• 5:24
  SPEAKER_00: Also on Wall Street's mind in the upcoming days will be the fact that the second
• 5:29
  SPEAKER_00: quarter earnings season begins this week,
• 5:31
  SPEAKER_00: with the traditional curtain raiser of results from the big banks,
• 5:36
  SPEAKER_00: and we'll get some more critical inflation data.