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SUNDAY LOOK AHEAD |
May payrolls came in at 172,000, more than double the estimate. The Nasdaq dropped 4 percent. Nine straight winning weeks ended on one number. This week CPI lands Wednesday and SpaceX lists Friday. Both arrive eight days before Warsh's first FOMC meeting with hike odds at 70 percent. |
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Last week the winning streak ended. The S&P fell more than 2 percent on Friday. The Nasdaq dropped 4 percent, its worst single session in over a year. The Dow finished the week near flat. |
The proximate cause was payrolls. But the foundation was already cracking. Broadcom (AVGO) beat on every line and lost hundreds of billions in market cap on a structural revelation. CrowdStrike (CRWD) and Palo Alto Networks (PANW) beat and fell for the same reason. The AI earnings cycle kept delivering. The market stopped paying extra. |
Then 172,000 jobs landed into that setup and the selling accelerated. Rate hike odds surged to 70 percent by year end. The 10-year yield crossed 4.50 percent. The 30-year pushed above 5 percent. Consumer staples and healthcare held while chips fell 8 to 9 percent across the board. The rotation is no longer a single session. It is a confirmed shift. |
This week is the final data window before the FOMC blackout begins Saturday. Warsh does not speak again until June 16. Whatever CPI, PPI, and the earnings say, the market reads it alone. |
Here is what to watch. |
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ADP AND EXISTING HOME SALES TUESDAY |
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Confirmation or Noise |
ADP's weekly employment change and existing home sales both land Tuesday. After Friday's 172,000 print, ADP carries confirmation value rather than headline weight. A second consecutive strong reading means the labor market strength is a trend. A sharp miss raises the early-Memorial-Day seasonal distortion argument some economists flagged Friday. |
Existing home sales give the current-state read on the housing freeze. Berkshire Hathaway paid $6.8 billion for a homebuilder last week betting mortgage rates fall in 18 to 24 months. With the 10-year yield now back above 4.50 percent after Friday's print, the sales data shows whether that bet is getting harder or simply more patient. |
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The Most Important Print of the Summer |
Wednesday's Consumer Price Index is the single most policy-sensitive data point of the week and one of the most consequential of the year. Warsh walks into it with 70 percent hike odds, a labor market that just doubled its estimate, and a committee already divided in public. He has no room to speak before the number lands. |
Watch core CPI specifically. A monthly print running materially above the prior month and June 16 becomes a live hike-versus-hold debate rather than hold-versus-cut. The two-year yield, already at 4.15 percent after Friday, moves higher within thirty minutes. A cooler read challenges the bond market's repricing. Rate-sensitive names recover and the rotation that confirmed itself Friday gets a third leg. |
The EIA crude oil and gasoline inventory data lands Wednesday afternoon. If inventories build alongside a cooler CPI, the energy inflation story is losing pressure from both ends. That combination gives the rotation durability beyond a single session. |
Watch Signal |
Watch core CPI first, then the direction of the two-year yield. If it holds above 4.15 percent after the release, the hike narrative has staying power into June 16. If it drops toward 3.90 percent, the cut conversation reopens and chip names that sold Thursday and Friday get a bid from falling yields. |
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Buffett, Gates and Bezos Quietly Dumping Stocks—Here's Why |
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The world's wealthiest individuals are making huge moves with their money. |
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The Pipeline Read |
Producer Price Index lands Thursday alongside initial jobless claims. CPI tells you where inflation is. PPI tells you where it is heading. If factory-gate prices are still climbing after Friday's labor market shock, the case for any near-term Fed relief gets pushed further out. |
Initial jobless claims are the first post-payrolls read on whether the labor market is accelerating or whether Friday's print was distorted by World Cup and early Memorial Day seasonal effects. A claims number above 220,000 would raise questions about Friday's headline. A number below 210,000 confirms the labor market is genuinely strong and hike odds stay elevated. |
Watch Signal |
Hot PPI alongside low claims is the combination that traps Warsh completely going into June 16. Inflation still building in the pipeline while the labor market holds firm. That is the scenario where a hike at June 16 stops being a tail risk. |
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The Liquidity Event of the Year |
SpaceX is expected to begin trading Friday on the Nasdaq at $135 per share, targeting a $1.75 trillion valuation in the largest IPO in history. The roadshow launched this week with Elon Musk pitching 100,000 new satellites and space-based data centers powered by solar energy. Morgan Stanley shared projections showing SpaceX reaching $3.4 trillion in revenue by 2040. |
Combined with Alphabet's (GOOGL) $85 billion equity raise last week, the market is absorbing $160 billion in new equity supply in a two-week window. The question is no longer whether capital rotates. The question is where institutions source the liquidity. Friday provided a partial answer. Jefferies noted that investors selling Magnificent Seven names to fund SpaceX allocations was the most likely rotation path. |
When SpaceX enters the Nasdaq-100 under the fast-entry rule, index funds buy it by selling current holdings proportionally. That is mechanical. The S&P 500 will not fast-track inclusion. That divergence starts compounding from listing day. |
Watch Signal |
Watch Nvidia (NVDA) and Advanced Micro Devices (AMD) through the week. Weakness that cannot be explained by macro or earnings data is the rebalancing signal. Both fell sharply Friday on payrolls and chip pressure. Further weakness into SpaceX's listing day is the capital rotation in action. |
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Oracle, Adobe, Lennar |
The earnings calendar this week tests three questions Friday left open. |
Oracle (ORCL) reports Tuesday. It is the enterprise AI infrastructure read sitting between the chip layer and the application layer. If Oracle's cloud and AI revenue is accelerating despite Friday's rate shock, the demand Dell (DELL) and Hewlett Packard Enterprise (HPE) described is flowing through to the software layer. A cautious guide would be the first signal that rising rates are slowing enterprise deployment before it shows up in hardware order books. |
Adobe (ADBE) reports Thursday. It sits at the exact fault line the letter has tracked in software all month. Snowflake (SNOW) proved AI can create new demand for data platforms. Adobe must answer the same question for creative tools. If AI Firefly features are driving net new revenue, the creative software layer holds. If subscription growth stalls, the displacement risk the market spent April pricing returns at the worst possible time. |
Lennar (LEN) reports this week as the direct housing rate-sensitivity read. Berkshire's homebuilder bet is a 24-month macro call on falling rates. The 10-year is back above 4.50 percent after Friday. Lennar's order book and cancellation rate show whether the housing market was already responding to earlier rate relief or whether Friday's jobs print just reset the clock. |
Earnings Signal |
Oracle is the enterprise AI adoption test. Adobe is the creative software displacement test. Lennar is the housing rate-sensitivity test. All three land into a week where Friday's payrolls print is still being processed and CPI arrives before any of them close. |
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Cisco was once the MOST valuable company on Earth. Then it fell 80% - and investors waited 25 YEARS just to break even. |
A Wall Street legend is out with a new warning: "It's about to happen again." He says many of today's overhyped AI darlings - stocks sitting in almost every 401(k) in America - could lose up to HALF their value or more. |
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Nine weeks ended on one number. The market that spent the spring outrunning hard data finally ran into a print it could not absorb. |
Warsh has no public voice until June 16. The FOMC blackout starts Saturday. The market reads 172,000 jobs, 70 percent hike odds, and whatever CPI and PPI say this week entirely on its own. There is no Chair available to walk back a hawkish interpretation or soften a hot print. |
For three years, investors rewarded AI exposure. Last week they demanded perfection. This week the data decides whether the market has finally set a standard the cycle cannot meet. |
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