Household Net Worth Jumps By Over $3 Trillion

The S&P 500 just entered a new bull market. It’s up 20% from the October 12, 2022 low.

Finally, some good news!

Market

Prices as of 4 pm EST, 6/8/23

Macro

Donald Trump has been indicted by a federal grand jury for his handling of classified documents.

• Until yesterday, no former president had ever faced charges brought by the federal government.

• Among the seven counts Trump is charged with are violations of the Espionage Act, obstruction of justice, and false statements.

• He has been summoned to appear in a federal court in Miami, FL on Tuesday.

• While a criminal conviction would disqualify Trump from running for president (again), it would presumably present a major obstacle in his route (back) to the White House.

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US household net worth rose by more than $3 trillion in the first quarter.

• This was the largest increase since Q4 2021.

• The rise was due largely to an increase in the value of equity holdings, which rose ~$2.4 trillion over the period.

• Those gains more than offset a ~$617 billion drop in real estate values.

• Consumer credit, meanwhile, rose at the slowest pace in 2 years, rising by an annualized 4.3%.

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Applications for unemployment benefits surged by the most in nearly 2 years last week, rising to the highest level since October 2021.

• Initial claims jumped to 261,000, well above the 235,000 consensus forecast.

• One data point does not a trend make, but the new figure broke out of the clear downtrend in place since mid-March.

• While the weekly data is very volatile, it suggests strength in the labor market may be waning.

FRED

Stocks

Adobe ADBE is looking to turn generative AI into ARR (annually recurring revenue).

• The company plans to sell subscriptions for new AI services—including its image-generating Firefly—to large business customers.

• As part of the offering—which comes amid a rise in lawsuits recently concerning the image data used in generative AI services—Adobe will help pay damages and provide legal assistance in the event customers are sued for copyright infringement.

• Subscription pricing has not been revealed, but investors welcomed the news as shares rose nearly 5% on the announcement.

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Shares of Carvana CVNA jumped 56% yesterday after the company announced better-than-expected guidance for its Q2 results.

• The company boosted its EBITDA and GPU (gross profit per unit) estimates well above Wall Street’s expectations.

• The improved numbers come not from selling more cars, however, but rather from selling more loans to customers and then dividing the number of cars sold by its gross profit.

• Nevertheless, short sellers have felt the pain, losing more than $1 billion betting against the stock this year.

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Investors of both the retail and institutional variety are getting more bullish on stocks.

• Individual investor sentiment—as measured by the AAII bull-bear spread—reached its highest level since November 2021 as bulls outnumbered bears for the first time in 4 months.

• Active portfolio managers, meanwhile, piled into stocks last week at the fastest pace since April 2021.

• According to the NAAIM Exposure Index (chart), active manager exposure to equities is at its highest since November 2021.

• Market breadth also looks to be improving: the S&P 500 equal weight ETF RSP is on track for its biggest inflow ever this week.

National Association of Active Investment Managers

Energy

Oil prices fell yesterday after news of talks between the US and Iran regarding a temporary nuclear deal.

• The alleged deal would involve Iran reducing its uranium enrichment activities in exchange for some relief from sanctions that would allow it to export more crude.

• It would also grant Tehran access to its income and frozen funds abroad.

• However, prices partially recovered after both countries denied the reports.

Earnings

• Yesterday’s highlights:

DocuSign DOCU: $0.72 EPS (vs. $0.56 expected), $661 million in sales (vs. $642M expected).

• Overall revenue increased 12% YoY driven by 17% growth in international sales.

• The company issued Q2 and full-year guidance that topped Wall Street’s estimates.

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What we’re watching today:

• NIO Inc. NIO

Top Headlines

• Skip, then hike: Traders’ bets on US Treasury futures point to a 25bps hike by the Fed in July after a “skip” this month.

• In arrears: More than 4% of office loans packaged into securities were +30 days behind on payments in May, the most since 2018.

• Charging standard: General Motors joins Ford in adopting Tesla’s EV charging standard.

• “It’s gone pretty poorly”: Twitter co-founder Evan Williams was “sad” following Elon Musk’s purchase of the social media company.

• Spy base: China and Cuba have allegedly reached a “secret” agreement for the former to establish US eavesdropping facilities in the latter.

• Smoke spreads: Smoke from Canada’s wildfires is making its way through the central and eastern US and temporarily grounding flights.

• US-UK pledge: President Biden and British PM Sunak signed the “Atlantic Declaration”, an economic partnership on AI, clean energy, critical minerals, and support for Ukraine.

• China PPI: China’s producer prices experienced the sharpest YoY drop in 7 years in May.

Crypto

Prices as of 4 pm EST, 6/8/23

• COIN vs. SEC: Coinbase CEO Brian Armstrong told the WSJ he plans to challenge the SEC for clarity on crypto.

• Red flag: A recent filing reveals some $70 billion moved by Binance and related entities through Silvergate Bank and Signature Bank from 2019 to this year.

• Halt: Binance.US will halt all fiat withdrawals and transactions as early as June 13.

• Rejected: Cardano is vehemently rejecting the SEC’s claim its ADA token is a security.

• Legislation: A new draft of a stablecoin bill aimed at combining ideas from both sides of the aisle has been released by House Republicans.

Deals

• Agricultural consolidation: Bunge is close to finalizing its +$30 billion merger with Glencore-backed Viterra.

• Gas roadblock: Magellan Midstream’s 4th largest investor plans to oppose the $19 billion takeover by Oneok for tax reasons.

• Space transportation: Firefly Aerospace, a rocket maker founded by an ex-SpaceX engineer, has acquired launch services company Spaceflight.

• AI funding: AI startup Cohere raised $270 million from a group including Oracle, Nvidia, and Salesforce Ventures.

• Keeping up with PE: Kim Kardashian pitched her new private equity fund, Skky Partners, to a crowd of investors at a conference in Berlin.

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