SURPRISING GROWTH

According to the latest release from the Labor Department, the economy demonstrated strong resilience as it added an impressive 272,000 jobs in May. These figures significantly surpassed the anticipated results, and alleviates concerns about a potential labor market slowdown. The rise in job numbers was primarily driven by the healthcare, government, and leisure/hospitality sectors, which collectively contributed 68,000, 43,000, and 42,000 jobs, respectively. Additionally, notable gains were observed in professional, scientific, and technical services, social assistance, and retail. In terms of wages, average hourly earnings exceeded expectations by rising 0.4% month-over-month and 4.1% year-over-year. Moreover, although the unemployment rate experienced a slight uptick to 4%, marking its first breach of that level since January 2022, the increase was coupled with a decline in the labor force participation rate to 62.5%, illustrating the continued strength and growth of the U.S. labor market. Furthermore, it is worth noting that the unexpected surge in job growth may potentially deter the Federal Reserve from implementing interest rate reductions.

INFLOWS CONTINUE

U.S. spot Bitcoin exchange-traded funds (ETFs) have been experiencing a record-breaking streak of consecutive net inflows, with 18 days of positive flows as of yesterday. The 11 spot Bitcoin ETFs collectively attracted $217.78 million in net inflows, led by BlackRock’s IBIT, which alone saw $350 million in net inflows, outshining other ETFs like Fidelity and VanEck. However, not all ETFs joined the upward trend, as some such as Ark Invest’s ARKB and Grayscale’s GBTC, experienced net outflows. Nevetheless, despite these fluctuations, the 11 spot Bitcoin ETFs have accumulated a total net inflow of $15.56 billion since their launch in January. Moreover, it is worth noting that this recent surge in net inflows points towards a recovery from previous stagnation, which at the same tike indicates sustained investor interest and confidence in Bitcoin as an asset class, especially driven by BlackRock’s IBIT.

FACING LOSSES

Real estate investors are experiencing losses in risky bets driven by Wall Street loans. In addition, syndicators made large purchases that are now unraveling as high interest rates add distress to an already troubled U.S. property market. For instance, one investor invested a substantial amount with a company in late 2021, promising high returns by buying U.S. apartments, however, most of the money is now lost. Moreover, the collision of social media-driven investing, Wall Street’s securitization machine, and rising interest rates highlights the risks in chasing quick profits in the real estate market, and concerns over U.S. commercial property distress are particularly focused on multifamily buildings, representing the largest share of properties facing financial trouble. Furthermore, the real estate distress is primarily affecting personal investors, unlike office buildings backed by major financial institutions, and this shift to risky investments, which resemble the subprime mortgage crisis of 2008, has left investors facing losses as property values decline, loans become due, and challenges arise for landlords and financial institutions.

POSSIBLE SUMMER SURGE

Goldman Sachs is forecasting a significant influx of money into the stock market this summer, potentially driving stock prices to record highs. The firm has noted that a massive $7.3 trillion is currently parked in money market funds, with a portion of this sizable sum expected to flow into equities. The potential catalyst for this shift could be a decrease in interest rates by the Federal Reserve, which is predicted to occur at the September Federal Open Market Committee meeting. Moreover, the timing for this influx appears to be opportune as July typically marks the start of a new quarter and the second half of the year. Historically, the first 15 days of July have been the most profitable two-week period for stocks since 1928, with the Nasdaq 100 and S&P 500 showing positive returns in the month of July for several consecutive years. This positive market sentiment combined with the potential new inflows of cash may drive stock prices even higher and set new records in the stock market.

BUYING HAS PAUSED

China’s central bank, after an 18-month gold-buying spree, decided to press pause last month. This move marked a significant shift as the People’s Bank of China announced that its gold reserves remained unchanged in May. The bank’s buying frenzy, which started in November 2022 and contributed to pushing gold to record highs in May, has been closely monitored by experts, and while some believe that China’s appetite for gold is far from satisfied, others suggest that the bank may be hesitant due to soaring prices. This buying spree by China, which is the world’s second-largest economy, has been part of a broader trend of central banks diversifying their reserves amidst escalating global tensions. However, signs of a slowdown in China’s demand emerged in recent months, raising concerns about the precious metal’s vulnerability to shifting market dynamics. Moreover, it remains to be seen how this temporary halt in gold purchases by China will impact the global gold market, where prices have reacted to the news with a slight decline.