Well let's get to the big story.
Breakdown.
Wall Street is hitting pause on a historic rally after stocks were to fresh all-time highs yesterday.
The S&P 500 closed on the 7600 mark, walking in an 8 day winning streak, and that is the longest green run we've seen since May of last year.
Well the AI sector catching another major tailwind to kick off June as we head into the final month of Q2.
All eyes are of course on this week's jobs.
Geopolitics and oil prices do continue to be closely monitored.
Joining me this morning live at the New York Stock Exchange is Michael Reinking, Senior Market Strategist at the NYSE.
Michael, good morning.
Thank you so much for joining me.
Good morning.
Thanks for having me.
Well, here we are, we're kicking off the month of June, and there has been plenty to digest whether we're talking about macro monetary policy or what's happening with the AI play here.
So of the record run.
Yes, so look, I mean, markets continue to be really strong.
We have Pope Jensen out kind of a CompuTexx yesterday he blessed the software sector and kind of led to some major upside.
This morning he was blessing Marvell as the next company to be a $1 trillion company, by putting a bid beneath bid beneath some of the kind of semiconductors' names as well, right?
And you know, kind of.
From here, you know, markets, we're going to start to move into kind of the labor market data which will start after the open today with jolts.
Then we'll have ADP tomorrow, non-farm payrolls on Friday, right, and kind of rates have been kind of this, this kind of a hot button, not, not like you know kind of the touch point, you know, kind of where markets have gotten a little bit nervous as we started to see 410 year yields move over 4.5%.
You know, we saw a big jump intraday yesterday, you know, kind of with kind of the expectation as things in Iran kind of looked like they were starting to potentially unravel, and then we kind of pulled back in the afternoon, you know, kind of with President Trump's kind of commentary, so we're back below that kind of that key 4.5 threshold, but that's kind of something to watch this.
Yes, and of course we are counting down to the June Federal Reserve meeting, but we do get key data as you mentioned on employment.
Yesterday we saw ISM manufacturing come in higher than expected, but do you think that was an inventory scramble, or what did you make of that manufacturing figure?
So I mean what we've seen is you know kind of the the PMI data and the surveys that we're seeing are all pretty positive, right?
And that also kind of dovetails with what we've heard from companies during.
Of earnings season and you bring up a very good point, right, is that the question is how much of a pull forward of demand is there?
Has there been kind of within the economy with the expectation that kind of higher energy prices are going to cause kind of prices down chain to start moving higher, right?
And so you have, you've had some pull forward of demand, you know, particularly within kind of the technology sector and industry, we've heard multiple companies acknowledging that.
Their customers have been, you know, kind of, you know, pulling forward some um kind of some orders or you know kind of companies suggesting that they have done it themselves to get ahead of price increases or, you know, kind of, um, shortages within kind of within the supply chain, right?
So you know that is a big question we'll have to see, um, you know, if you think about it kind of sequentially with where things can move from a rate perspective, right, like if you are to see, um, you kind of the inflation side kind of move a bit higher but then.
And the growth side of the equation kind of face some more difficult comps in the back half of the year that will kind of help keep the Fed a little bit on hold.
And of course I do have to ask you about what we're seeing in the tech sector, especially with artificial intelligence.
And when we see these companies, some of the mag 7 names and then investing in debt, corporate debt in particular, especially with Alphabet, what are the implications here, because we have to keep in mind that when it does come to Cap liquidity is limited, isn't it?
Yes, you know, look, so you know the announcement we got last night from Alphabet is kind of a shot across the bow, right?
If you think about kind of these mag 7 companies, right, they have been these companies that are kind of asset light, you know, kind of throwing off tons of cash flow over the last decade or so, right, and you've had these massive buyback programs, right, which has kind of continued to keep kind of a bid underneath the market.
Um, you know, last night you, you, you, you saw this company who does have, you know, a phenomenal business model, right, coming to kind of tap capital markets, raise equity, you, you know, they have been kind of tapping kind of the debt markets as well, right, so that is, you know, kind of that's kind of a sea change and markets are going to need to digest that.
I think you're seeing a little bit of weakness in kind of some of the other hyper scales kind of on the back of that, on the back of that announcement, and that's something that markets are going to have to come to grips with and the question is how long is that process going to continue, like how long is that capex spend, that level of cap spending necessary, and then at what point.
Are these companies going to really start to see kind of the benefits of impacting the bottom line from all of this?
Yes, we continue to keep an eye on announcements coming out from CompuTex, of course, and we'll monitor what's coming out from Microsoft's event in the Bay Area.
But finally, before I let you go, we're monitoring oil prices and of course the geopolitical tensions in the Middle East.
At the same time, we have to keep in mind that it is summer driving season here in the US, so is the reality of oil higher for longer?
Yes, I mean, I think like you know at this point that is the case, right?
I mean we all have a little bit of, I think, like some Iran fatigue at this point because we continue.
To hear you know these these headlines that were close to a deal, um, for the anticipation of kind of getting that across the finish line, it kind of it feels a little bit like you kind of Snoopy with Lucy kind of pulling the football, you know, kind of each time, you know, but you know.
You have oil prices have kind of remained kind of pretty tame, I would say considering what's what's going on.
We've broken to the downside.
We're sitting below some kind of key moving averages for kind of Ice rent and WTI for Ice Brend it's about $95 a barrel.
It's 50 day which we.
Last week, you know, if we can kind of take out last week's lows in the, in kind of it's like 92, 91, 92-ish, right, you actually have some, some more technical downside into kind of testing the lows from February and April and the 100 day moving average kind of in the mid 80s, $85 or so.
You know, I think there's a couple of things to think about this kind of longer term.
I think that there is going to be kind of a higher for longer kind of oil price environment unless you actually start to see some real demand destruction, but you're going to have to kind of replenish all of the SPRs and and and all those.
All, all of the draws that we've seen kind of since the start of, uh, kind of since the start of Iran, um, and you know if you think about where the administration is right, we've kind of been draining our SPR.
My guess is that you probably see kind of the administration continue to.
To try to keep a lid on oil prices, you know, heading into midterm elections, right?
So that's kind of capping maybe some of the upside, right, but I think longer term you're going to have to see some investment and increase in drilling, and you're, you're going to see prices you're going to stabilize at a higher level.
Well, Michael, there are a lot of moving parts to keep in mind, so thank you so much for weighing in and thank you so much for joining us this morning.
Thanks for having me.
Thank you, Michael.
