Thursday's Markets Update:(June 15, 2023)

16 Jun 2023 by rate3

On Thursday, Retail sales unexpectedly increased and the NY Manufacturing Index improved, driving NASDAQ (open: 13,570, close: 13,782, +1.6%) and BTC (open: 24,954, close: 25,455, +2.0%) higher.

Retail sales in the US rose 0.3% in May, beating forecasts. The biggest increases were seen in building materials (2.2%), motor vehicles (1.4%), food services (0.4%), general merchandise stores, furniture, food and beverages, sporting goods, and electronics. Sales were flat at health, clothing, and fell at gasoline stations (2.6%).

New York manufacturing activity unexpectedly improved in June. The Empire State Manufacturing Index climbed 38 points to +6.6, from a four-month low of -31.8 in May. Inventories and unfilled orders remained negative. Delivery times were little changed. The number of employees and average workweek remained negative. Input and selling price increases slowed considerably. Planned capital spending remained weak. Firms were more optimistic about the six-month outlook.

At the same time, Philadelphia manufacturing activity slowed in June. The Philadelphia Fed Manufacturing Index decreased to -13.7, from -10.4 in May. The general activity and new orders indexes remained negative.

Additionally, unemployment claims rose to 262K in the week ending June 10th, above expectations. This was the highest level since October 2021 and aligns with other recent data that suggests some softening in the labor market. The Fed's aggressive tightening campaign is likely to continue to put pressure on the labor market, which could lead to further increases in unemployment claims.

Overall, we see a growing dichotomy between consumers' and businesses' optimistic expectations, which are reinforced by a tech market short-term rally and driven by "soothing" messaging from corporate medias, which still refuse to directly confront Powell as did crypto-medias with Garry Gensler, and the increasingly grim macroeconomic reality, artificially created by the Fed's unwise rate policy.