Welcome back. As Memorial Day weekend in the US is the official start of summer, we should start to see volumes in the stock markets head lower for the next few months. On the economic front, this week we have Manufacturing PMI, the Unemployment Rate, Non-Farm Payrolls and Average Hourly Earnings. Investors will also look to see if Trump will spread more fake news negatively affecting equities.
Holiday, Celebrate: Markets will be closed in the US on Monday (5/29) for Memorial Day. Markets in the UK and in China will also be closed for their respective holidays on Monday (UK Spring bank Holiday, China Dragon Boat Festival). When trading does resume, expect volumes to be lower as traders and quants are still recovering from their BBQ hangovers. Individual stocks could potentially see outsized moves if they have a lack of liquidity.
Super Mario Speaks: On Monday (5/29) ECB President Mario Draghi European tour takes him to Brussels to testify about the economy and monetary developments. Draghi mentioned that interest rates will be staying at record low levels even though the European economy has been improving. He feels that an increase in rates may not be sustainable. Since US markets are not open Monday, investors will have to wait until the open the next day to get a reaction. However, markets will likely react to the news by going higher as the European punch bowl will not be going away any time soon.
Oil: Last week, OPEC decided to extend its output cut for 9 months until March 2018. Investors were disappointed that they didn’t cut output even further, and in reaction, oil fell for the day over 4%. West Texas finished below $50. Traders will monitor to see if oil falls even further as the supply glut the world over continues. This could adversely affect energy companies, and oil producing nations economies.
Non-Farm Payrolls & Unemployment Rate: Non-Farm Payrolls, the Unemployment Rate and Average Hourly Earnings for May are scheduled to be released this Friday (6/2). Should the figure show that the economy created more jobs than expected, or if average hourly earnings jumped higher, we will likely see the markets go higher, the US Dollar go higher and oil go lower. Should these numbers disappoint, the markets will likely go lower along with the US Dollar. If the number is strong, Sean Spicer will likely say this number is real unlike Obama’s White House fake numbers while a weak number was made up in the Unemployment centers. The Fed will also be paying attention to the data points as strong readings would give additional ammo to the Fed to raise interest rates once again at their next meeting.
Chinese Data: This week, China will be releasing Manufacturing PMI and Caixin Service PMI. Investors will monitor the data and the Yuan’s reaction as weak data will put downward pressure on the currency, with the potential for markets to fall globally.
Bitcoin: WTF. If you are invested in the digital currency Bitcoin, I imagine you are doing some type of shady business or are a huge gambler. However, if you are in some parts of China, and you are looking to get your money out before the Yuan depreciates too much and your money becomes devalued, here is an option. Bitcoin is up 180% for the year and hit a record of $2,791.70 before falling. As of yesterday, Bitcoin has fallen 19% off of its highs. Investors will look to see if this crypto currency continues to sky rocket, or if other crypto currencies come to light, which would plunge Bitcoin lower.
Manufacturing PMI: PMI readings from across the globe are due out this week. Traders will watch these readings as potential weak readings could cause central banks to take further steps to stimulate their respective nation’s economies.