See what’s driving market performance around the world in today’s Morning Lineup.  Bespoke’s Morning Lineup is the best way to start your trading day.  Read it now by starting a two-week trial to Bespoke Premium.  CLICK HERE to learn more and start your trial.

“A state of war is not a blank check for the president when it comes to the rights of the nation’s citizens.” – Sandra Day O’Connor

Below is a snippet of content from today’s Morning Lineup for Bespoke Premium members. Start a two-week trial to Bespoke Premium now to access the full report.

There was little conviction in equity futures heading into the June jobs report this morning. Overnight, Asian stocks were lower as they caught up to the declines from the US yesterday while European stocks attempt to bounce from yesterday’s sell-off.  Industrial Production in Germany was weaker than expected falling 0.2% m/m versus expectations for no change, but commentary from ECB officials including de Guindos and Lagarde both implied that more rate hikes are in the cards.

Today’s Non-Farm Payrolls (NFP) report missed expectations by 21K while the Unemployment Rate declined to 3.6% which was right in line with expectations.  Average hourly earnings and average weekly hours both came in better than expected, though.  As far as revisions go, prior readings were revised lower by over 100K with May’s originally reported level of 339K revised down to 306K.  Futures have seen a modest bounce while treasury yields are lower.

The streak is over! With today’s weaker-than-expected report, the record run of better-than-expected NFP reports ended at 14 and came just one month shy of tripling the prior record of five straight better-than-expected reports.  It only figures that the streak ended on the same month that the ADP Private Payrolls report crushed estimates and caused just about every investor out there to price in a better-than-expected report as a sure thing.  If you’re keeping track, the last three times now that ADP surpassed forecasts by 300K or more, the corresponding NFP report for the same month missed forecasts.  On 6/3/21, ADP topped forecasts by 328K, and on the next day, NFP missed forecasts by 116K.  On 1/5/22, ADP topped forecasts by 397K, and two days later NFP missed by 251K.  Now, this week ADP tops forecasts by 372K, and NFP missed by 21K.  Relying on the ADP report as an indicator for the NFP report? What is it they say about insanity and doing the same thing over and over again?

Start a two-week trial to Bespoke Premium to read today’s full Morning Lineup.

See what’s driving market performance around the world in today’s Morning Lineup.  Bespoke’s Morning Lineup is the best way to start your trading day.  Read it now by starting a two-week trial to Bespoke Premium.  CLICK HERE to learn more and start your trial.

“An absolutely new idea is one of the rarest things known to man.” – Thomas More

Below is a snippet of content from today’s Morning Lineup for Bespoke Premium members. Start a two-week trial to Bespoke Premium now to access the full report.

The first three days of Q3 have been an example of stocks not picking up right where they left off in the second quarter. while things started off quiet enough during the shortened session on Monday, yesterday’s session and this morning’s pre-market have traded heavily.  This morning the tone has been especially weak as European stocks trade down over 1% on breadth that is skewed 10-1 to the downside.  There hasn’t been much data to steer the market, but rising interest rates have been acting as a significant weight.

This morning, there’s much more economic data to contend with. ADP Private Payrolls were just released and came in much higher than expected at 497K versus forecasts for a reading of 220K.  Jobless claims were more mixed.  Initial Claims came in slightly higher than expected at 248K versus forecasts for 245K and up from a downwardly revised reading of 236K. Continuing Claims managed to come in weaker than expected (1.72 mln vs 1.737 mln).  Overall, these reports suggest that any doubts over the health of the labor market can be put to rest, at least for now.  Besides these two reports, we’ll get the monthly JOLTS report at 10 AM followed by Non-Farm Payrolls tomorrow.  While there’s a lot of employment-related data to contend with don’t forget about the 10 AM release of ISM Services.

With the S&P 500 rallying into bull market territory and new 52-week highs, investors have become bullish.  According to the weekly survey of individual investor sentiment from AAII, bullish sentiment jumped up to 46.4% from 41.9%.  While bulls are still not in the majority and haven’t been in over two years, this week’s reading was the highest level of bullish sentiment since November 2021. Looking at the chart below, sentiment and the stock market have carved out identical patterns over the last two years indicating that investors’ views of the stock market have been based on how stocks have performed in the moment.

You may think that investor sentiment has always been positively correlated to the stock market’s performance, but that hasn’t necessarily been the case.  The chart below shows the rolling two-year correlation between AAII bullish sentiment and the S&P 500 since 2000.  While the correlation between the two has usually been positive, the levels have varied widely.  In fact, levels like the current reading of +0.50 or more have been uncommon occurring less than 12% of the time since 2000.

Start a two-week trial to Bespoke Premium to read today’s full Morning Lineup.