Awaiting CPI and FOMC
2% gains last week for the Fund, looking to continue the gains this week
Quick summary:
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Last week's jobs report exceeded expectations with 272,000 new jobs, underscoring a strong U.S. economy with an unemployment rate at 4%. The market reaction was briefly negative, but we’re already back to all-time-highs
We took advantage of the Wed strong directional move and made 2% last week for the Fund, thus overturning the entire negative return for May.
This week it’s all about tomorrow: first the CPI data in the morning, followed by the FOMC meeting in the afternoon, where we get the new dot-plot chart. PPI comes in the next day. Expectations on FOMC vary from no change to slight adjustments in rate cut forecasts.
As always, we’ll guide our paid subscribers through the FOMC and tell you immediately on Wednesday whether the signal was a medium-term buy or sell. Don’t miss it.
The competition
Great job to our leaderboard front-runners with impressive results across the board. It’s all coming down to the last three weeks. Make sure to get a good estimate of what happens with the FOMC meeting, as this will likely influence the rest of the month. And good luck!
Consistency is key to staying in the top. And good predictions, obviously.
NOTE: For all those new to the whole thing, read more about it here or watch a video of Scott and myself guiding you through the survey, showing you all its features, and briefly explaining how the competition works.
Last week’s performance
Last week’s unexpected twist came with Friday's jobs report, which revealed a strong addition of 272,000 jobs in May, surpassing expectations significantly. This surge in employment, coupled with a minor increase in the unemployment rate to 4%, supports the ongoing narrative of a robust economy, thereby reducing the likelihood of imminent interest rate cuts.
The week overall was again mostly jumpy or flat, except on Wednesday when the market push above all-time highs got consolidated, just in time before the new inflation print and before FOMC.
While the committee is expected to maintain the interest rate at 5.25%-5.5%, the focus will be on the Summary of Economic Projections for signs of potential future rate changes. Additionally, this week's CPI data will be scrutinized for further indications of inflation trends, particularly after April's figures suggested a cooling. The prevailing sentiment suggests that the Fed may adjust future rate cut expectations, potentially indicating a cut later in the year. Depending on the Fed’s stance revealed during the meeting, we might see initial market reactions ranging from rallies to sell-offs, setting the tone for market dynamics as we move further into June.
We defined our playbook for FOMC on Saturday, feel free to remind yourself or read through in case you’ve missed it:
In the realm of technology, significant developments are anticipated at Apple’s annual developers conference, where new AI-driven features are expected to be unveiled, possibly highlighting strategic partnerships with leading tech companies. Meanwhile, Tesla’s shareholder meeting will address the approval of CEO Elon Musk’s significant $55.8 billion pay package. On the earnings front, Oracle, Broadcom, and Adobe are set to report, offering insights into the demand for AI technologies.
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