Bitcoin Collapses, June Jobs, Adjusting GDP, Interesting Nvidia Buys and Sells
There's no way to sugarcoat it, the macro has been weaker of late. And a lot seems to be riding on the June jobs report after the numbers posted on Wednesday.
You've reached your free article limit
You've read 0 of 1 free Pro articles.
A liquidation event
On Thursday, while Americans were celebrating their independence, Bitcoin was selling off and selling off hard. As I pass the zero-dark hours on Friday morning, I have seen the largest (by market cap) and best-known cryptocurrency trade as low as $53,701 overnight. At least for the moment, while I type out this morning note, Bitcoin appears to have found a level in the $54K+ area where there is some give and take in the market. That's down from a high for the week of roughly $63,700 on Monday. That's a top to bottom beat-down of 15.8% for the week so far.
The selloff appears to be for some reason and not because Bitcoin and crypto enthusiasts have lost faith. Approximately a month back, long-bankrupt crypto exchange Mt. Gox had announced that it would start repaying creditors in July and that those payments would be made in Bitcoin and Bitcoin Cash. Mt. Gox, for those who may have forgotten, was once one of the largest crypto exchanges in the world. Launched in 2010, Mt. Gox was hacked in 2011 and went bankrupt by 2014. Reportedly, 600K Bitcoins were stolen in the hack.
On Thursday, Frances Yue of MarketWatch reported that more than 47K bitcoins worth more than $2.6B were transferred out of storage in a move thought to be preparation for the announced repayment. Additionally, Yue reports that the U.S. and German governments were said to be selling Bitcoins to crypto exchanges in order to dispose of seized assets acquired through enforcement against illegal activity.
It's June Jobs Day!
That was tough. Leaving family and friends late in the early evening on the Fourth of July, ahead of the fireworks and all of that nonsense in order to prepare for Friday's trading day is not something people outside of the trading/investing universe really understand. "You have to work tomorrow?" ... "Actually, I'm already late for work."
Folks from other walks of life, even folks in finance, but who work for someone else cannot comprehend the number of hours put in and the level of commitment required to wade your way into the marketplace every day without the safety net of a salary or wages and come back with enough to feed the family. Tough? Yeah, I might whine, but I wouldn't go back to working for someone else. You see me on TV with someone else's name under mine someday and you'll know that I managed to blow myself up somehow.
The macro has been weaker of late. There is no way to sugarcoat that. The Bureau of Labor Statistics will release their twin surveys for the nation's labor market health for the month of June this morning. A lot seems to be riding on these numbers after the numbers posted on Wednesday crossed the tape.
First the ADP Employment Report for May private payrolls showed further deceleration in growth, but not all-out free-fall across private sector demand for labor. The number came in at 150,000 jobs created, down from 157,000 in May and below expectations for something in the mid-160,000's. This was with 63,000 alone coming from the leisure and hospitality industry, so clearly, the economy is running into some trouble elsewhere.
As for state level jobless claims, there are definitely growing signs of a rebalancing in labor markets. Initial Claims printed at 238,000, which was above consensus and left the four-week moving average for the series at 238,500. That's a long cry from the 210,000 to 215,000 range that this series had run at from late 2023 into early May.
Continuing Jobless Claims, which run a week behind initial claims, are becoming something of a problem. That number spiked this week to 1.858 million individuals out of work for a sustained period of time. This series is now at its worst level in terms of numbers of individuals unemployed for a prolonged period across the U.S. since November 2021.
There's More...
Beyond labor market-related data, there were other data-points that disappointed economists on Wednesday. May Factory Orders printed at -0.5% month over month, down from April's +0.4%, which was revised downward from +0.7%. Economists had been looking for something more like +0.2% on top of that +0.7% print, so this is considerably worse than it even appears.
The ISM Non-Manufacturing Index (Services PMI) was a real shock to the system as the service sector has been or should I say, "had" been the strength of the U.S. economy. The headline print hit the tape in a state of contraction for a second month in three. The 48.8 print at the headline fell well short of the 52-ish number that economists had projected.
Inside that report, the month of June got really ugly. New Orders and Backlog of Orders simply fell off of a cliff. Service sector-based employment continued to erode, now in contraction for a fifth consecutive month, as inventories just collapsed. Was there growth anywhere? Of course. Prices hit the tape in expansion, an expansion that hit an incredible 85 consecutive months reflecting the irresponsible fiscal policies of the past four administrations covering almost two and a half decades.
The FOMC Minutes
From the Fed meeting that culminated on June 12...
"In discussing the outlook for monetary policy, participants noted that progress in reducing inflation had been slower this year than they had expected last December. They emphasized that they did not expect that it would be appropriate to lower the target range for the federal funds rate until additional information had emerged to give them greater confidence that inflation was moving sustainably toward the Committee's 2% objective."
Adjusting GDP
On Wednesday, the Atlanta Fed revised their real-time GDPNow model for the second quarter to growth of 1.5% (q/q, SAAR) from 1.7%. Just a couple of weeks ago, this model was still at growth of 3.3% when we pointed out that the Atlanta Fed's model was an upside outlier and that the New York, St. Louis and Cleveland Feds' models were all much lower. New York has been below 2% growth for many weeks, while both St. Louis and Cleveland have been below 1% for many weeks.
Atlanta will next revise that model this coming Wednesday when the final May Wholesale Inventories print crosses the tape. NY, Cleveland and St. Loo will all revise their models over the weekend.
Had to Laugh
I had to chuckle. Just a bit.
On Wednesday, we learned that Nvidia NVDA CEO Jensen Huang had sold 1.3 million shares of NVDA stock over the prior week for about $169 million. The transactions were executed under Huang's 10b5-1 trading plan, which was adopted in March, so I believe nothing to get very concerned about.
What made me laugh was the fact that ahead of that story on Wednesday, I saw where Congresswoman Nancy Pelosi (D-Cal) had purchased 10,000 shares of NVDA since June 24. While probably not meaningful, it is interesting. Pelosi also bought 20 June 20 Broadcom AVGO calls with an $800 strike price, while selling 2,500 shares of Tesla TSLA and 2,000 shares of Visa V.
June Employment Situation (08:30 ET)
Non-Farm Payrolls: Expecting 183K, Last 272K.
Unemployment Rate: Expecting 4.0%, Last 4.0%.
Underemployment Rate: Expecting 7.5%, Last 7.4%.
Participation Rate: Expecting 62.6%, Last 62.5%.
Average Hourly Earnings: Expecting 3.6% y/y, Last 4.1% y/y.
Average Weekly Hours: Expecting 34.3, last 34.3 hours.
Other Economics (All Times Eastern)
13:00 - Baker Hughes Total Rig Count (Weekly): Last 581.
13:00 - Baker Hughes Oil Rig Count (Weekly): Last 479.
The Fed (All Times Eastern)
05:40 - Speaker: New York Fed Pres. John Williams.
Today's Earnings Highlights (Consensus EPS Expectations)
No significant quarterly earnings scheduled.
At the time of publictaion, Guilfoyle was long NVDA equity.
