As of 4:21 p.m.:

Closing Breadth

S&P 500 Sectors

% Movers

Nasdaq 100 Heat Map

* CrowdStrike CRWD -$35 on earnings release...

Watch Tuesday's full episode of the Halftime Report — June 3, 2025

* Overall, Reserve Bank directors noted considerable uncertainty about the outlook. While most directors described recent economic conditions as generally stable, they also expressed concern about the potential impact of evolving trade and other policies on economic activity, prices, and employment. In light of elevated uncertainty, many directors had observed consumers and businesses becoming more cautious about their spending and future plans. Several directors commented on expected price pressures related to tariffs, including higher prices for consumers. Labor market conditions remained healthy, with some directors noting low turnover and limited layoffs. However, some directors said businesses in their Districts had indicated future staff reductions might be needed to absorb costs associated with tariffs and reduced government funding in certain sectors.

* No sentiment was expressed by the Board at today's meeting for changing the primary credit rate at this time.

Here are today's things:

* Shorted SPY at $594.25, shorted QQQ at $526.10.

* Added to GRNY short at $21.16.

* Shorted TSLA at $347.10.

* Evidence that trade policy starting to affect economy; Firms may be more willing to increase prices now relative to the past.

* "I see the U.S. economy as still being in a solid position, but heightened uncertainty poses risks to both price stability and unemployment."

* "As I consider the appropriate path of monetary policy, I will carefully consider how to balance our dual mandate, and I will take into account the fact that price stability is essential for achieving long periods of strong labor market conditions."

* "There is evidence that changes to trade policy are starting to affect the economy... I anticipate a slowdown in the expansion of economic activity from last year's pace."

* Reiterates current stance of Fed monetary policy is well positioned.

I have two reseach calls in the next 1 1/2 hours.

Back after.

Cliff Asness on Bloomberg TV:

"You know what really bothers me, the phrase, "money on the sidelines."

Sound familiar?

Watch Asness on Buying Opportunities, Markets, Tarirffs - Bloomberg (at the 7 minutes 21 seconds mark)

- NYSE volume is flat to its one-month average;

- Nasdaq volume is 28% below its one-month average;

- VIX index: down 1.53% to 18.08

Back to the Elizabeth Holmes point in yesterday's opener, "Risks AI Poses to Job Market (And U.S. Economy) Are Underpriced":

If it worked so well, they had to do this ... why? 

Microsoft dumped $450 million into Builder.ai, would think they would do a bit more due diligence? Alas, these days, people just throw money at things, clearly. And buy stocks like CRWV that report EBE (earnings before expenses). Klarna goes back to people; these guys I believe were a scam and had people doing it to begin with, and a story everyone forgets about, Amazon’s AMZN theoretical AI powered self-checkout system, well there were really a bunch of people in India monitoring video cameras, before they shut that whole thing down, because it wasn’t working, just like the AI powered self-ordering system at McDonald’s MCD. 

How quickly people forget stories like this:

Business Today – Builder.ai, once touted as a revolutionary AI startup backed by Microsoft, has collapsed into insolvency after revelations that its flagship no-code development platform was powered not by artificial intelligence—but by 700 human engineers in India.



The company marketed its platform as being driven by an AI assistant named “Natasha,” which could supposedly assemble software applications like Lego bricks. But recent reports and commentary have revealed that behind the scenes, customer requests were manually fulfilled by developers, not machines.



Commenting on the unraveling, Ebern Finance founder Bernhard Engelbrecht described it in a widely circulated post on X: “Customer requests were sent to the Indian office, where 700 Indians wrote code instead of AI,” adding that the end products were often buggy, dysfunctional, and difficult to maintain. “Everything was like real artificial intelligence — except that none of it was.”

The company marketed its platform as being driven by an AI assistant named “Natasha,” which could supposedly assemble software applications like Lego bricks. But recent reports and commentary have revealed that behind the scenes, customer requests were manually fulfilled by developers, not machines.

Commenting on the unraveling, Ebern Finance founder Bernhard Engelbrecht described it in a widely circulated post on X: “Customer requests were sent to the Indian office, where 700 Indians wrote code instead of AI,” adding that the end products were often buggy, dysfunctional, and difficult to maintain. “Everything was like real artificial intelligence — except that none of it was.”

From Boockvar:

Quick review of JOLTS data

Somewhat old news because we're about to get May jobs data but still very relevant to look at, the April job openings count was 7.39mm, up about 200k m/o/m, above the estimate of 7.1mm and vs 7.48mm in February.

The hiring rate rose one tenth to 3.5% after four months of 3.4% prints. The quit rate though slipped one tenth to 2%.

Sector wise, there was a 100k opening increase in healthcare/social assistance, a pretty consistent sector with the aging population as we know. Also of note, there was a 27k person increase in Information job openings to the most since last October. Job openings rose in retail to a 3 month high. On the flip side, job openings fell for construction (very slightly), in manufacturing and in lodging by about 130k jobs. The Federal Govt saw a job opening increase of 13k after falling by the same amount in March.

While somewhat dated data as stated, Treasuries responded with higher yields in response to the upside in job openings and rise in the hiring rate. The 2 yr yield at 3.95% is up 3 bps vs 9:59am est. The 10 yr yield is up 2 bps in response.

Job Openings

Hiring rate

Sold more indexes short on the rip higher from the morning lows:

* SPY $592.91

* QQQ $525.42

lonestar

25 minutes ago

Every time I watch CNBC in the morning, I think about this movie and I feel that they are trying to close me. They are trying to sell me every one of these commentators from Stephanie link to Tom Lee to the infamous professor Siegel.

When I think about what america produces compared to what it used to forty years ago, it disgusts me. Today it creates non tangible digital instruments of destruction, trades them like rotten sardines to people afraid of missing out after watching cnbc entertainment or news articles created to sow FOMO. Like Alex Baldwin, in this clip, greed is good. There is no journalistic integrity in financial advice on cnbc. I have more than you that is all that matters (like alex Baldwin's watch and car in this clip)

From JPMorgan:

· US: Futs are lower. Pre-market, Mag 7 are all lower modestly; AMZN/META -0.4%. Bond yields are 2-3bp lower; USD is stronger. Commodities are mixed with oil moving higher and precious metals lower. Overnight headlines are mostly muted. The OECD cuts global economic outlook amid trade policy uncertainty (here). They now expects 2025 and 2026 US GDP to print 1.6% and 1.5%, respectively; this is below the G20 average of 2.9% and 2.9% in 2025 and 2026, respectively.and..

 Yesterday, the ISM-Mfg was net negative, but stocks were able to rebound in the afternoon session thanks to 3x positive tariff headlines vs. last Friday/weekend, particularly the potential Trump-Xi call. However, there were not much change to the narrative at this stage. As we move closer to the July 9 deadline, keep an eye on the G7 Summit (June 13-14) and NATO Summit (June 23-25) on negotiation progress; Japan sets the G7 Summit as the target for a US-Japan deal. (i) *TRUMP AND XI LIKELY TO SPEAK THIS WEEK: CNBC (ii) *EU TRADE CHIEF SEFCOVIC, US TRADE REP. GREER TO MEET WEDNESDAY; (iii) *US PUSHES COUNTRIES FOR BEST TARIFF OFFERS BY WEDNESDAY: RTRS. Today, macro calendar is largely light in the US but headlines in tariff and tax bill will be closely followed.

From Peter Boockvar:

A few more steel and aluminum stats/The pulse of the consumer from companies that sell to them/Other

Adding to my comments yesterday on the broader impact of steel and aluminum tariffs on the users of them as a raw material input, my buddy David Rosenberg had a great stat in his piece yesterday saying "There are 376k steelworkers in the United States and 8.3 million employed in the construction sector." Just to highlight that one industry that of course uses a lot of steel in its structures. I'll add one more heavy user of both steel and aluminum, the auto sector. They employ directly about 1 million people in the US according to the BLS but add about another 3.5 million when including those that are in retail, wholesale and repair and maintenance. According to The Aluminum Association, there are about 164,000 workers in the US in aluminum. By the way, the US imports about 40% of its aluminum needs from Canada which has benefited from cheaper hydro energy sources.

With the help of Google Gemini, I found this article from Automotive Dive in a piece back in February talking about the 25% tariff on steel and its impact on the auto sector and price of a car. These stats came from Jay Cushing, a senior bond analyst with Gimme Credit, "A typical car contains about 1,000 pounds of steel with an estimated cost of between $6,000 and $7,000 per vehicle, Cushing said. A 25% tariff on steel could raise the cost of individual vehicles by as much as $1,500." I guess a 50% tariff means it will raise the average vehicle cost by $3,000? 

With a hat tip to VD, the credit card companies spoke late last week at a Bernstein conference and I went through the transcripts to see what they are saying on the economy and their consumer. Not much different than from their earnings call but of course more timely.

From American Express, on their customer:

"It's really been consistent. What we've seen through May is what we saw through April and what we saw in March and in the first quarter, and so goods and services consistent. Airline, pretty consistent, and we said that was down a little bit. I think lodging gets a little more challenged, but restaurant is still very, very strong. And if you look at the individual segments, international, SME, and US consumer, pretty consistent to the way they are. So, unless something crazy happens in June, I think when we start talking about this in July, we're going to say, the second quarter pretty much looked just like the first quarter did, FX adjusted, and all that other kind of stuff."

From MasterCard:

They reported earnings on April 28th, so this view is a month later. "Now, if you include the first three weeks of May, we see exactly the same. So, spending trends have largely been the same, Now, if you look at this a little bit closer and then you'd say, why is that? If you look at the headlines, if you look at the sentiment surveys, and we just saw one yesterday, it was surprisingly positive. So, you see a lot of rhetoric there, and you see a lot of headlines, and it hasn't really translated into consumer behavior. So, why is that? Because the underlying support of the labor market continues to be there. We still have low unemployment, and we have wage growth that is kind of keeping up with inflation, above inflation. So, purchasing power is solid, which are both key drivers."

On travel specifically and we know for sure the shifting destination trends internationally away from the US and to other places. "There was also some moderation into the US. This is something that we have seen in some of the headlines, but it's also true that we've seen increases elsewhere, increases in Europe, for example."

Signet Jewelers reported this morning and the comps look good and the stock is higher. "We delivered positive same store sales growth each month of the quarter, and into May, by bolstering our offerings at key price points and continuing the evolution of our assortment. Our three largest brands - Kay, Zales, and Jared - all saw sequential comp sales improvement from the fourth quarter on higher margins, highlighting the impact of our outsized focus on our larger brands."

Dollar General beat both revenue and earnings estimates. "Our efforts to improve execution and enhance the associate and customer experience are yielding positive outcomes in both our operational performance and our financial results...These efforts contributed to market share gains in sales of both consumables and non-consumables, and drove growth with both our core customer and trade-in customers during the quarter."

They saw a "2.7% increase in average transaction amount and a .3% decrease in customer traffic. Same store sales in the first quarter of 2025 included growth in each of the consumables, seasonal, home products, and apparel categories."

With their updated guidance (slightly higher), they do lay out the risks out there with tariffs and the consumer and said with respect to the guidance, it "assumes the company will be able to mitigate a significant portion of the potential impact to its cost of goods from tariffs at currently implemented rates, but that consumer spending could be pressured by tariff related price increases."

But, not all consumers use credit cards as more are using Buy Now, Pay Later, particularly lower end income earners and this is what Campbell's said in their earnings call yesterday:

"In the current dynamic macro environment, consumers are making thoughtful spending decisions, which is materializing in our categories. Consumers continue to cook at home and focus their spending on products that help them stretch their food budgets, and they are increasingly intentional about their discretionary snack purchases. These behaviors supported growth in our meals & beverage categories and increased headwinds in our snaking categories."

The May China private sector Caixin manufacturing index weakened to 48.3 from 50.4 and below expectations of 50.7. Of note, "The contraction in supply and demand was attributed to sluggish external demand, which fell for a 2nd straight month. The gauge for new export orders dropped to the lowest level since July 2023." Also, employment continued to decline and "prices remained at a low level as supply and demand weakened. Input costs declined for the third straight month on falling prices of energy and chemical raw materials. Sales prices were also subdued as businesses sought to lower prices to remain competitive, resulting in the corresponding gauge contracting in May for the sixth straight month."

"Currently, unfavorable factors affecting China's economic development remain relatively prevalent. Uncertainty in the external trade environment has increased, adding to domestic economic headwinds. Major macroeconomic indicators showed a marked weakening at the start of the second quarter. The downward pressure on the economy has significantly intensified compared to preceding periods."

The positive within the commentary was this, "Business optimism improved from April's low. The indicator for future output expectations remained in expansionary territory, with the reading rebounding by nearly 3 points, up from the third lowest level on record seen in April. Surveyed companies generally believed that the China-US trade conflict would abate in the near term, and were hopeful for improvements in the external market."

Following the individual country CPI figures last week, the Eurozone May CPI bringing it all together was higher by 1.9% y/o/y, down from 2.2% in the month before and one tenth less than expected. Helping to keep a lid on the headline was the 3.6% y/o/y drop in energy prices. The core rate slowed to 2.3% y/o/y from 2.7% and that was also one tenth below the estimate. Your guess is as good as mine as to the extent to which tariffs will flow through these numbers in the coming months/quarters, particularly on autos.

European bonds are rallying a touch in response and helping to rally US Treasuries. Giving a lift too for global bonds was the good 10 yr JGB auction overnight where the bid to cover of 3.66 was well above the previous one yr average of 3.14. The 10 yr yield closed down 2 bps to 1.49% but the 40 yr yield was unchanged at 3.11%.

Of interest too with JGB's, BoJ Governor Ueda commented on feedback he's gotten on their asset purchase process that has been slowing its buying over the past year and in light of the jumping yields. "Many opinions indicated that it's appropriate to keep cutting the bond purchases while balancing predictability and flexibility."

Premarket percentage movers at 8:47 a.m. ET:

Most active premarket ETFs as of 8:29 a.m. ET:

ECONOMIC CALENDAR:

FED SPEAKERS: 

12:45 p.m.: Fed Bank of Chicago President Goolsbee (Voter) participates in a moderated question-and-answer session before the 2025 Corridor Business Journal Mid-Year Economic Review, Cedar Rapids, IA (Livestream available. Embargoed text TBD); 

1:00: Fed Board Governor Cook (Voter) speaks on the economic outlook before the Council on Foreign Relations C. Peter McColough Series on International Economics, NYC (Text and livestream available. Q&A from audience); 

3:30: Fed Bank of Dallas President Logan (Non-Voter) gives opening remarks and moderates a discussion before a Fed Listens roundtable with El Paso community leaders, El Paso, TX (No Q&A. Livestream available) 

AUCTIONS

1:00 a.m.: Treasury Announces a 4 and 8 Week Bill Auction11:00AM: Treasury's Buyback Announcement (Liquidity Support)

11:30 a.m.: Treasury hosts a $60B 6-Week Bill Auction 

Upside:

-AGEN +24% (signs $141M+ strategic deal with Zydus for BOT/BAL and manufacturing assets)

-RSLS +22% (announces EU MDR Certification for Entire European and United Kingdom Product Portfolio)

-MLTX +21% (reportedly Merck held talks to purchase MoonLake for $3B+)

-CRDO +14% (earnings, guidance)

-CTRN +14% (earnings, guidance)

-CEG +12% (signed 20-year deal for clean, reliable nuclear energy in Illinois with Meta)

-SIG +12% (earnings, guidance)

-DG +10% (earnings, guidance)

-FERG +10% (earnings, guidance)

-BNTX +9.5% (multiple broker price target raises following BMY collaboration)

-STR +8.4% (to be acquired by Diamondback Energy for $4.1B in all cash transaction)

-UEC +7.6% (initiated at Outperform at BMO)

-GILT +7.1% (secures $40M contract for Virtualized SkyEdge IV Platform)

-DCI +7.0% (earnings, guidance)

-OKLO +7.0% (signs MoU with Korea Hydro and Nuclear Power)

-HIMS +6.7% (to acquire EU wellness platform ZAVA)

-LI +6.1% (reports May deliveries)

-VSCO +5.2% (reports prelim Q1, provides update on security incident)

-PINS +4.4% (JPMorgan Chase and Co Raised PINS to Overweight from Neutral, price target: $40 from $35)

-DLTR +3.5% (higher in sympathy with DG)

Downside:

-BMBL -6.1% (JPMorgan Chase and Co Cuts BMBL to Underweight from Neutral, price target: $5)

-SATS -4.3% (misses $183M second interest payment amid FCC review)

-NIO -3.1% (earnings, guidance)

-PSN -2.9% (cuts guidance)

-OLLI -2.6% (earnings, guidance)

-ASML -2.0% (Barclays Cuts ASML.NL to Equal Weight from Overweight, price target: €650)

Trump Wants To Delete State Medical Marijuana Protections From Budget While Continuing To Block Cannabis Sales Legalization In D.C. - Marijuana Moment

I shorted TSLA at $344.18.

Bonus — Here are some great links:

A View From the Floor 

From ICE to NICE - The Market's in Spring Training

Microsoft and the AI Race

Breadth Metrics Consistent With a Market Low That Will Be Hard to Breach

Understanding What Happens at Market Highs

* The U.S. dollar is resuming his decline...

Good stuff from Helene this morning about lagging breadth:

From Hysteria to Shrugs, the Market Is a Funny Thing

Aside from that do you realize that breadth has been red for eight of the last 10 trading sessions? We’ve looked at the chart several times lately. If the S&P 500 makes a move upward over that mid-May high and breadth cannot follow suit we’ll have to put this indicator on the negative side of the ledger.

Since, as you can see, we are a little short-term oversold thanks to the negative breadth we should see a day or two of rallying so let’s see what that breadth line can do. As a reminder, just because I think we can rally for a day or two doesn’t mean the intermediate-term indicators have changed. They remain overbought and I still think we are more apt to see a rise in volatility in the next few weeks than not.

Jim Cramer makes a good point here on AI related layoffs at Microsoft MSFT:

This is consistent with my column Monday morning:

JUN 2, 2025 9:45 AM EDT

Risks AI Poses to Job Market (And U.S. Economy) Are Underpriced

* The herd believes that AI will produce productivity gains and (corporate profit) margin improvement, justifying 22-times forward price earnings ratios

* But (memo to the consensus), how can the U.S. economy grow anywhere historical rates if AI meaningfully disrupts employment?

Here are some pretty over the top comments from the CEO and founder of Anthropic:

“AI could wipe out half of all entry-level white-collar jobs — and spike unemployment to 10-20% in the next one to five years, Amodei told us in an interview from his San Francisco office.”

"Cancer is cured, the economy grows at 10% a year, the budget is balanced — and 20% of people don't have jobs."

There are several issues here - why would a top AI executive be so hyperbolic and whether the positive impact of AI on productivity/corporate profits and adverse impact of AI on the jobs market are being accurately assessed by investors (which is incorporated in a 22-times forward price-to-earnings multiple)?

Why Say This Stuff?

Why would the Anthropic CEO say these types of things? These are the types of comments that just beg for extreme government oversight and regulation, globally, if anyone really believed them. As an executive of a business, who would want that?

This may fall into the “he doth protest too much” bucket -- just like Elizabeth Holmes at Theranos. The more it was clear Theranos was failing and could not do what people (investors, partners, the public) were told, the more grandiose Holmes' claims became.

All of these businesses are incredibly capital consumptive – they lose money like nothing ever previously known to mankind. They are in constant fundraising mode. “Hey guys, the technology isn’t working and scaling like we thought it would, can I have another $100bb at a 2x markup to the last round we just did 3 months ago” is just not that compelling of a pitch to investors. But what he is saying now, boy, if it could just do 25% of what he claims, well then you are on to something.

This of course comes at the same time as the CEO of Klarna is telling everyone he is firing the AI he put in place, and hiring the humans back, because the AI is failing so badly at even the simple use case job.

I would also love to know how the economy grows 6% to 7% a year with 10%-20% unemployment? I am sure Anthropic can hallucinate a good answer to that one!

Moreover, if AI was going to do all these things, would Jensen Huang be selling Nvivida (NVDA) hand over fist all of the sudden?

My views:

The IT revolution gutted blue collar workers in the 1990s. The AI revolution is likely to gut white collar workers in the next decade, especially entry level jobs (See the Tweet about Meta fully automating Ad creation above). Unemployment will probably spike higher and no one -- our politicians, economists and strategists are talking about this. No one is talking about preparing the work force for dramatic change and the radical transformation of most companies.Will the machine do it better than man? The data of college graduates difficulty in finding jobs today is presaging the issue. The disruptive AI train can't be easily stopped according to a recent book written by Jim Vandehel and Mike Allen, which I highly recommend.

Whether AI will be as effective as many proclaim, stay tuned (and I remain skeptical).

I am not sure how this causality can be proven:

From the Comments Section:

Dougie Kass

Shorting more SPY $592.66 and QQQ $523.72 (605 PM)

Wolf Street howls about tariff revenues.

More downbeat housing data. 

The Short Range S&P Oscillator moved from -0.20% to -1.36%.