Good morning,
The first week of June lived up to its reputation—relatively calm compared to the last six months. The S&P 500 ended the week up +1.5%, along with most international equity indices. The VIX—Wall Street’s fear gauge—fell to its lowest level since February as markets moved past the tariff drama… for now. Of course, we had drama of a different kind with the very public spat between Donald Trump and Elon Musk.
One sidebar worth noting: Tesla stands apart from the rest of the “Magnificent Seven.” While the others continue to post strong earnings growth, Tesla’s are declining. Its stock price seems barely tethered to current earnings, instead reflecting bets on future, not-yet-realized technologies—and perhaps on the CEO’s proximity to government. That relationship took a hit last week, and a stock moving 10% based on political friendship (or lack thereof) is a troubling sign for markets and governance alike.
Back to the broader picture: growth stocks had a strong week while defensive sectors like Staples, Utilities, Healthcare, and Comm Services fell—suggesting that recession fears may be fading. This came during a big week for economic data, with mixed signals on the labor front. Nonfarm payrolls weren’t as strong as the headline number suggested, but they didn’t confirm the weaker ADP data either. The one concern: bond yields ticked back up to recent highs, which could be a headwind for equities if it continues.
This morning, futures are basically flat. The spotlight is on renewed trade talks between the U.S. and China, with Treasury Secretary Scott Bessent leading a delegation to London. Any progress on tariffs or China’s rare-earth export controls would be welcomed by global markets.
On the economic front, CPI and PPI inflation data are due on Wednesday and Thursday. They’ve been running cool the past couple of months but always carry the potential to surprise. Friday’s Michigan Consumer Sentiment report will round out the week heading into next week’s Fed meeting.
Be well,
Mike