Well, it was a crazy day. Equities started the session off with a rally after a slightly better-than-expected April Core PCE print. That was followed by a fairly severe midday selloff after the Chicago PMI missed badly for May and the Atlanta Fed was forced to revise its GDPNow model for the second quarter significantly lower. Finally, portfolio managers took over and tried to mark stocks up as the final few hours of May wound down to a close.

Treasuries were in demand on Friday as the U.S. 10-Year paid 4.5% by day's end and the U.S. 2-Year Note paid 4.87%, both yields down five basis points from where they had been early on. 

The S&P 500 rallied 0.8% for the session led by Caesars Entertainment  (CZR)  after Bloomberg broke news of activist investor Carl Icahn having taken an equity stake. Salesforce  (CRM)  also had a strong performance regaining a small portion of what had been lost on Thursday. The Nasdaq Composite closed just slightly in the red, nearly unchanged on the day.

Interestingly, all 11 S&P sector SPDR ETFs closed in the green on Friday, as nine of these funds gained at least 1%, led by Energy  (XLE)  and the REITs  (XLRE) . Technology  (XLK)  may have gained 0.18% for the day, but remained in last place on the daily performance tables. Trading volume was elevated thanks to the month-end activity.

Have a nice weekend, all. Monday will come soon enough, and you should have Doug back then. Be safe. I thank you for your time, and I appreciate you having me in Doug's place when he is out. Sarge out. 

Q) The 1982 St. Louis Cardinals went 92-70, winning the NLCS over the Atlanta Braves, and defeating the 95-67 Milwaukee Brewers in the World Series. This season has always fascinated me because I missed it. That was the summer that I did boot camp at Parris Island and that fall, infantry school at Camp Lejeune. Yes, I drank the water. It was delicious. 

Funny thing about those 1982 Cardinals is that as a team they hit just 67 home runs, or 5 more than Aaron Judge (the true single season HR champ) hit in 2022. Only two Cardinals hit more than 10 home runs that year, while seven Cardinals stole more than 10 bases. 

Can you name those two Cardinal "sluggers"? For extra credit, the Brewers, who lost that World Series, had three hitters that hit more than 30 home runs that year. Name them.

A)  Cardinals: George Hendrick (19), Darrel Porter (12)

Extra) Brewers: Gorman Thomas (39), Ben Oglivie (34), Cecil Cooper (32)

Monday... 

10:00 ET: May ISM Manufacturing Index

10:00 ET: May Construction Spending

Tuesday... 

10:00 ET... JOLTs April Job openings & quits

Wednesday... 

08:15 ET: May ADP Employment Report

10:00 ET: ISM Non-Manufacturing Index

Thursday... 

08:30 ET: Weekly Initial Jobless Claims

08:30 ET: Q1 Non-Farm Productivity revision

08:30 ET: Q1 Unit Labor Costs revision

08:30 ET: April Trade Balance

Friday... 

08:30 ET: May Non-Farm Payrolls

08:30 ET: May Unemployment Rate

08:30 ET: May Underemployment Rate

08:30 ET: May Participation Rate

08:30 ET: May Average Hourly Earnings

08:30 ET: May Average Workweek

10:00 ET April Wholesale Inventories

15:00 ET: April Consumer Credit 

Monday pm: GitLab  (GTLB) ... (-.04)

Tuesday am: Designer Brands  (DBI) ... (.13)

Tuesday pm: CrowdStrike  (CRWD) ... (.89)

- Hewlett Packard Enterprises  (HPE) ... (.39)

- PVH  (PVH) ... (2.18)

Wednesday am: Campbell Soup  (CPB) ... (.70)

- Dollar Tree  (DLTR) ... (1.43)

- Hibbett  (HIBB) ... (2.63)

- Ollie's Bargain Outlet  (OLLI) ... (.65)

- Thor Industries  (THO) ... (1.83)

Thursday am: Big Lots  (BIG) ... (-3.92)

- JM Smucker  (SJM) ... (2.33)

Thursday pm: DocuSign  (DOCU) ... (.79)

- Vail Resorts  (MTN) ... (9.97)

- Zumiez  (ZUMZ) ... (-1.13)

The 1982 St. Louis Cardinals went 92-70, winning the NLCS over the Atlanta Braves and defeating the 95-67 Milwaukee Brewers in the World Series. That season has always fascinated me because I missed it. That was the summer that I did boot camp at Parris Island and that fall, infantry school at Camp Lejeune. Yes, I drank the water. It was delicious.

Funny thing about those 1982 Cardinals is that as a team, they hit just 67 home runs, or five more than Aaron Judge (the true single season HR champ) hit in 2022. Only two Cardinals hit more than 10 home runs that year, while seven Cardinals stole more than 10 bases. Can you name those two Cardinal "sluggers"?

For extra credit, the Brewers who lost that World Series, had three hitters that hit more than 30 home runs that year. Name them.

Intraday relative strength hits a low as does the S&P 500, while the daily one minute MACD (moving average convergence divergence) postures itself bearishly.

Caesars Entertainment  (CZR)  pops on a Bloomberg News report of a new Carl Icahn stake. 

Added overnight. Willing to add on weakness down to the 38.2% Fib level at $632. Should that spot crack, I'll reduce by at least half of what I have bought since last night, taking a trading loss, but not a loss overall. 

My net basis is $597.50 after the additions. Current pivot would now be the 200-day SMA (simple moving average) ($683), which the loss of, has brought on the additional post-Salesforce  (CRM)  pressure.

On Inflation

This Friday morning, headline April PCE crossed the tape at month over month growth of 0.3%, maintaining the pace set in February and held steady through March. The year over year print landed at growth of 2.7%, also maintaining the pace set in March. Both of those numbers printed precisely upon consensus view. As mentioned in Market Recon this morning, it's pretty difficult to surprise on PCE given how late in the month the series is released.

That said, core prices did surprise. Just a wee bit, but a surprise to the downside, which is exactly what the policy junkies wanted to see. That's why we experienced an early rally across equities that is quickly giving way to the forces of darkness and selloffs. At the core, April PCE inflation hit the tape at month over month growth of 0.2%, below expectations for 0.3% and down from 0.3% for both February and March, and 0.4% for January. An actual slowing of core price increases? Sounds like it. On a year over year basis, core PCE crossed at growth of 2.8% as expected, and for a third consecutive month.

Hitting the tape alongside the PCE data, Personal Income grew 0.3% in April, down from 0.5% growth in March, while Personal Spending in April increased just 0.2% a month after households were scorched for spending growth of 0.7% in March. This report does not really hurt or help, in my opinion the FOMC gets to a place where a rate cut - or hike - would be considered something that could happen soon.

On GDP

We all saw the Q1 GDP revision, which while reflecting meager growth of 1.3%, was at least somewhat accurate with GDI printing at growth of 1.5%. Readers will recall back in Q3 2023, there was an inescapable mismatch between the two, which is why there was and remains so much doubt about actual economic growth for quarters one through three for calendar year 2023.

Annualized q/q growth for quarters one through three for 2023 averaged growth of 3.07% when measured solely in GDP, but just 0.97% when measured in GDI. Now, keep in mind the huge downward revisions to 2023 job creation data that the Bureau of Labor Statistics has already let us know through their BED report in April are on the way.

By the way, just for the new kids, honest economists in discussing economic growth average GDP and GDI when the two diverge. An adherence to GDP when GDI does not measure up is a telltale sign of either an undereducated economist or more likely in this climate, a politically biased economist.

Atlanta

As mentioned this morning, Thursday's print for April Goods Trade Balance would force the Atlanta Fed to rein in its GDPNow model for Q2. That's exactly what happened this morning. Atlanta took that estimate down to growth of 2.7% (q/q, SAAR) from 3.5% as the inputs for real net exports, and real personal expenditures were decreased, and the input for real gross private investment was increased, slightly offsetting the downward impact of the prior two mentions.

This also means that the New York Fed and St. Louis Fed will likely revise their models lower this weekend as well. New York stood at growth of 2.04%, while St. Louis stood at growth of 1.42%. Both revise their models weekly unlike Atlanta which does so almost in real-time. Cleveland also runs a model that is more the result of its interpretation of the slope of the yield curve and not based on incoming macroeconomic data.

S&P futures: -3 vs FV

Nasdaq Futures: -31 vs FV

Ten Year Note: 4.533%

Two Year Note: 4.927%

Three Month T-Bill: 5.386%

Gold: $2,365.40, down small

Silver: $31.475, -0.19%

Bitcoin: $68,756, +0.18%

WTI Crude: $77.82, down small

DXY: 104.62, down small

- Added to ServiceNow  (NOW)  at $644, after its Salesforce  (CRM)  adjacent plunge.

- Added to long-time Sarge fave CrowdStrike  (CRWD)  at $320 after a regular session beatdown, but also positive results from competitor Zscaler  (ZS) .

S&P futures: -12 vs FV

Nasdaq Futures: -77 vs FV

Ten Year Note: 4.555%

Two Year Note: 4.498%

Three Month T-Bill: 5.386%

Gold: $2,364.90, down small

Silver: $31.425, -0.35%

Bitcoin: $68,337, -0.43%

WTI Crude: $77.96, up small

DXY: 104.94, down small

Tis' Friday. Tis' the last trading day of the month. Been a rough day for the S&P 500. Been a rough day for the week for the Nasdaq Composite. There has been some punishment. There has also been some reward. 

Then there has been Nvidia undefined, a stock that really deserves its own category at this point. Q1 GDP has been revised. It wasn't so hot. It sort of reinforces my belief that the US economy could be evolving towards a period of stagflation or in Doug's words "slugflation." 

Speaking of Doug, you may or may not have realized that he is off today, and I... your old pal, Sarge, will be your tour guide for the next several hours.

If that's not a good reason to do some good old calisthenics then I don't know what is. Let's pop out some push-ups, sit-ups or crunches for the young guys, and get that blood circulating. If you can't do push-ups, sit-ups for any exercise whatsoever, at least let me hear your guttural roar. 

Everyone has that beast inside. Unleash, attack, and conquer. Victory is but hours away. So, let it be written.

Rock on.

Sarge