👒Job report's coming

Good morning investors! Investors will be looking out for jobs data as they try to predict the Fed’s decision.

Today we cover:

• The upcoming job report.

• GameStop bringing more surprises?

• Are people quitting stocks?

📊 Economy and News 

What to expect from today’s job report

Investors are eagerly anticipating May’s nonfarm payrolls report for insights on whether the Federal Reserve might ease its efforts against inflation.

Economists predict the addition of 190,000 jobs in May, a slight increase from April's 175,000 gain.

Additionally, the market will scrutinize wage data, with average hourly earnings expected to rise by 0.3% for the month. This would maintain the 12-month increase at 3.9%, consistent with the previous month, suggesting the central bank still has work to do.

Citi forecasts the report will show only 140,000 new jobs, with the unemployment rate reaching 4% for the first time since January 2022. If accurate, this could prompt the Fed to consider cutting interest rates sooner than anticipated.

Currently, markets are expecting the first rate cut in September, followed by another in December.

Regarding wages, Goldman Sachs largely agrees with the consensus, noting that the current rate of wage growth is incompatible with the Fed's 2% inflation target.

Global hits:

• Euro zone bond yields rise after European Central Bank delivers ‘hawkish’ cut.

• China’s Alibaba is courting European and U.S. small businesses as it goes global.

• Swissy drops against dollar, hitting 13-month low.

Also check: Saudi Arabia set to raise $11.2 billion selling Aramco shares at lower end of expectations.

📈 Stocks

S&P 500 5,352.96 (-0.020%)
DJIA 38,886.17 (+0.20%)
NASDAQ 17,173.12 (-0.086%)
BRENT CRUDE 80.18 (+0.39%)
* Prices as of Jun 7th, 12:20 AM UTC

Gamestop to rise again today?

Shares of GameStop surged on Thursday after meme stock influencer "Roaring Kitty," also known as Keith Gill, announced a YouTube livestream—the first in almost four years.

Gill scheduled his live chat for noon on Friday, sparking trader speculation that he would share bullish insights about his significant GameStop holdings. Previously, in August 2020, he hosted three-hour livestreams detailing his investment thesis for the brick-and-mortar video game retailer.

GameStop's stock soared over +47%, closing at $46.55 per share, after reaching an intraday high of $47.50. Trading was briefly halted due to volatility. The stock has more than doubled in value this week alone.

More than 10,000 viewers were already waiting for the livestream, with numerous comments flooding the chat.

Keith Gill, who also goes by DeepF------Value on Reddit, recently reappeared online after more than three years, following his role in the 2021 trading frenzy that affected several hedge funds. Last Sunday, he posted screenshots of his E-Trade portfolio, showing five million shares of GameStop and 120,000 call options, with a combined market value of at least $200 million as of Thursday night.

If Gill exercises his call options, his stake in GameStop could increase to 17 million shares. Should the stock return to its May high of $64.83 per share, his position could be worth over $1 billion.

The stock is up +30% pre-market today.

Good to know: Rivian redesigns all-electric R1 pickup and SUV, adds Nvidia chips and improves performance.

💵 Personal Finance

Are stock portfolios going out of fashion?

Things are changing quickly. Back in the day, investing in stocks and bonds was considered the winning formula. However, that isn’t the case anymore now that we have better (and more) options to choose from.

Longer-term Treasury yields have hit their highest levels in 16 years, causing their value to plummet, and stocks are expensive as well. It is time for investors to look elsewhere.

Is the stock market a bad choice? Not really, the S&P 500 Index is still offering great results. But, most experts agree that it has peaked. The chart below highlights the last few years:

It stands at 10.48% so far for 2023. Also, UBS said it now expects the S&P 500 (.SPX) to hit 4,700 points only by December 2024, instead of the middle of the year as it forecasted earlier, due to expectations of higher-for-longer U.S. interest rates.

Stocks versus real estate: From March 1992 to March 2022, the U.S. average growth rate was 5.3%. The S&P 500 returned 9.65% annualized from the beginning of 1992 to the same period in 2022. The inflation-adjusted appreciation on the Dow Jones Industrial Average over the same 30-year period was 5.565% per year, and that's just for asset value. If you assume that dividends are reinvested, the returns are better than 8.044%. Over time, stocks outperformed real estate.

Here are some great alternative options :

Real Estate Investment Trusts

REITs invest in a range of real estate, including housing, commercial buildings, hotels and warehouses, and then distribute the rental proceeds to the owners. This is a clever way of benefitting from the real estate industry without investing millions.

Comparison: Over a 25 year period, the index returned 9.05% compared to 7.97% for the S&P 500 and 7.41% for the Russell 2000.

Gold

Gold can be a great investment option in today’s environment. You can invest in gold bullion, gold coins, gold mining companies, gold futures contracts and mutual funds that invest in gold. You may, however, need a safe place to store the investment like a safe deposit box at a bank if you choose physical gold.

Comparison: The S&P 500 Index of stocks had a 10.43% average annual total return between 1970 and 2022, according to an analysis by Securian Asset Management. Gold had a 7.7% return over the same period.

Commodities Futures

Commodities are risky but very rewarding. Options include grain, corn, and cotton. However, you have to be careful because external conditions can impact commodity prices.

Comparison: Commodities can be very rewarding but also risky. Lithium, for example, offered 72.49% returns in 2022, in comparison crude oil offered 6.71% returns, and copper offered -14.13% returns.

Don’t give up on stocks altogether. They should remain a part of your portfolio but keep your expectations lower because we may not again see the numbers seen in 2019 to 2021.

💰 Be a Better Investor

👩🏽‍⚖️ Legal Stuff
Nothing in this newsletter is financial advice. Always do your own research and think for yourself.

Advertise with Us