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“When people see some things as beautiful, other things become ugly. When people see some things as good, other things become bad.” – Lao Tzu

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Flat on either side of unchanged.  That’s where futures stand this morning heading into what is going to be a very busy day for economic data.  Things started off with ADP Private Payrolls at 8:15 which came in much stronger than expected at a level of 278K versus forecasts for an increase of 170K.  After that, we got updates on Non-Farm Productivity, Unit Labor Costs, as well as Initial and Continuing Claims.  Non-Farm Productivity was less bad than feared, falling 2.1% versus forecasts for a decline of 2.5%.  Unit Labor Costs were a big bright spot as they only increased 4.2% compared to forecasts for an increase of 6.1%. Jobless claims, meanwhile, were slightly better than expected on both an initial and continuing basis.

We’re still not done yet, though.  At 9:45 S&P Manufacturing PMI comes out at 9:45 followed by ISM Manufacturing and Construction Spending at 10 AM.

In Europe, stocks are higher this morning following some positive economic data as most manufacturing PMIs were modestly better than expected but still in contraction. Inflation data also came in lower than consensus forecasts with EU CPI unchanged in May versus expectations for an increase of 0.2%.  With that, the y/y change fell to a 14-month low of 6.1% which was the lowest reading since February 2022.

In central bank news, ECB vice president Luis de Guindos noted that the central bank is in the ‘final stretch’ of the current rate-hiking cycle and that hikes in increments of 25 bps are ‘the new norm’. In comments earlier, ECB President Lagarde was more hawkish noting that there is no ‘clear evidence’ that underlying inflation has peaked, and added that she can’t say the ECB is satisfied with the inflation outlook.

It was a tale of many equity markets in May with the great (Nasdaq up 5.8%), the good (S&P 500 up 0.3%), the bad (Russell 2000 down 1.1%), and the ugly (Dow down 3.5%).  Comparing the performance difference between the ‘great’ and the ‘ugly’ in May, the Nasdaq outperformed the Dow by 9.29 percentage points which ranks as the 9th widest margin of outperformance for the Nasdaq relative to the Dow in history.

The eight other months where the Nasdaq outperformed the Dow by more than it did in May all occurred in a 35-month span beginning in December 1998 and ending in October 2001. In fact, the Nasdaq outperformed the Dow by more than ten percentage points in back-to-back months twice (Dec 1998 to Jan 1999 and Nov 1999 to Dec 2000).  If you think the Nasdaq is in a frenzy now, the period from late 1998 to the early 2000s makes it look like breakfast at Wimbledon.

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