Wall Street Brunch: Will The Jobs Market Keep Humming?

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Economists expect that another 185K jobs were added in May. (0:18) Nvidia 10-for-1 stock split on the way. (1:46) A deeper dive into crypto ETFs. (5:35)

The following is an abridged transcript

This week’s main event on Wall Street won’t happen until Friday when the government releases the official jobs figures for May.

Economists expect that nonfarm payrolls rose by 185K last month, with the unemployment rate staying steady at 3.9%. Average hourly earnings are forecast to post a 0.3% rise.

BNP Paribas warned that the sharp drop in the pace of job creation between March and April likely overestimated the degree of weakening due to the shift of Easter on the calendar not being fully accounted for and with education hiring expected to bounce from a very low level in April.

But Ian Shepherdson, economist at Pantheon Macro, noted that S&P Global’s May employment composite reversed only half of April’s unexpected drop and that the composite has “recently has been a relatively good indicator of payrolls in the sectors that it covers.”

“It points to another weak private payrolls print for May, making us a bit more confident with our subpar 150K forecast, driven by the Homebase data,” he added.

This jobs report is the last one before the June Fed meeting, where markets are pricing in a near-certainty of no move.

But Standard Chartered strategist Steve Englander is going against the higher-for-longer trend.

“Futures markets are pricing in about 3bps of cuts at the 31 July FOMC meeting,” he said. “We think this is too low. In fact, a July cut is our baseline. There are two more PCE releases before the July meeting, so there is considerable room for core PCE to slow.”

Also on Friday, Nvidia’s (NVDA) 10-for-1 stock split goes into effect after the closing bell.

Jonathan Weber, who leads the Cash Flow Club Investing Group, says stock splits “used to be more important in the past when fractional share buying was uncommon or even impossible.”

But he says the Nvidia split could result in the stock getting included in the price-weighted Dow Jones Industrial Average.

“In case Nvidia gets included in the Dow Jones Index, there would be some forced buying by ETFs replicating the index, which could have a positive impact on Nvidia’s share price. But overall, I believe that the impact of the stock split shouldn’t be overinterpreted – it will not be a game-changer for the company.”

And Walmart (WMT) will be in the spotlight with its shareholder meeting on Wednesday and its traditional Associates Celebration on Friday.

Walmart recently announced plans to run its member-only Walmart+ shopping event earlier this year, starting on June 17 and running through June 23, which is three more days than last year. The change in timing puts the event a few weeks ahead of Amazon’s Prime Day.

Among notable earnings this week, GitLab (GTLB) and Science Applications (SAIC) report results on Monday.

Tuesday will see CrowdStrike (CRWD), PVH (PVH), Hewlett Packard Enterprise (HPE) and Bath & Body Works (BBWI) weigh in.

Lululemon (LULU), Dollar Tree (DLTR), Brown-Forman (BF.A), Campbell Soup (CPB) and Five Below (FIVE) are up on Wednesday.

And Samsara (IOT), DocuSign (DOCU), J.M. Smucker (SJM) and NIO (NIO) are due to report on Thursday.

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In the news this weekend, OPEC+ agreed to extend their agreement on crude output into 2025. Combined output next year will total 39.7 million barrels a day.

The group is cutting supply by a combined 5.86 million barrels a day until the end of June. Of that, 2 million barrels a day represented unanimous commitments under OPEC group policy for this year. Part of the coalition is voluntarily cutting another 1.66 million barrels a day until the end of 2024, while a second set of 2.2 million barrels a day in voluntary cuts lasts until the end of the second quarter.

WTI crude (CL1:COM) (USO) is just above $77 per barrel and is up 7% year to date. Brent crude (CO1:COM) (BNO) is above $81, up 5.5% this year. Many OPEC+ members need oil to be above $80/barrel to balance budgets, Reuters says.

And Elon Musk is facing a $7.5 billion insider trading lawsuit from a Tesla (TSLA) shareholder, according to legal documents filed in a Delaware court.

Tech investor Michael Perry filed the lawsuit alleging that Musk sold more than $7.5 billion of company stock in 2022 before its Q4 results were made public on January 2, 2023, disappointing shareholders.

Musk “improperly benefited” by $3 billion in profits from the alleged sales that took place in November 2022 and December 2022, Perry argued.

“Musk exploited his position at Tesla, and he breached his fiduciary duties,” to the company and its shareholders, he said.

In the crypto space, BlackRock’s iShares Bitcoin Trust (IBIT) overtook Grayscale Bitcoin Trust (GBTC) in assets under management this past week at $19.68 billion.

Seeking Alpha’s Rena Sherbill talked to expert Ryan Wilday from Crypto Waves about funds.

RS: What are your thoughts about the ETFs in this space? We saw that BlackRock overtook Grayscale this week. What are your thoughts in general about all the players in the ETF Bitcoin space? And what are your thoughts specifically around BlackRock?

RW: I have a little bit of concern with all the institutions getting into the game. A lot of Bitcoin is getting pulled into these wallets that are – the nice thing about ETF versus GBTC, GBTC is as we call it, a Hotel California.

Once Bitcoin went into the GBTC fund, this is the trust fund that existed before the ETFs. There was no way for it to get out. It was stuck in there. Well, what’s nice about an ETF is they do have to buy and sell Bitcoin to manage the float of shares and the asset value.

I know we can’t get into the mechanisms of that, but we’ve seen – we can now watch those wallets actually buy and sell Bitcoin. So it’s nice that that’s not a – no longer a Hotel California Bitcoin, so to speak. It’s not checking in and not checking out.

But at the same time, I would much rather see the people in general, meaning the populace, be able to freely have as much Bitcoin, get it cheaply and hold it in wallets. Just because that’s kind of my – that’s just my rebellious state, my rebellious view of Bitcoin that its value is standing outside the institutions and being able to have custody of something without a third-party.

Now, personally, what am I doing with those ETFs? Of course, I’m trading them. I want to juice up my stock returns, my stock brokerage account returns, of course. So it’s there. I’m not going to stick to my sort of theological views, if you will, for lack of a better term. And I’m going to use it because it’s there, like, there’s no doubt and we talk about those ETFs.

I haven’t kept charts on them because now there’s too many. And so what I do in the service is just present, this is the level of Bitcoin. This is the basic roundabout conversion to the level of Bitcoin, so that everyone has a rough amount of Bitcoin per share. And so I track that as best as I possibly can. It’s hard to get a very exact and I say, like, okay, now if you want to trade against say that 50,600 support level on Bitcoin, here’s your rough level – here’s your rough calculation to that level for the ETF.

So people can actually do that, and I’m managing it the same way, because I don’t keep my own chart on the ETF. There’s just too many.

You can get full interview on the crypto space on our Investing Experts podcast this week.

For income investors, Lockheed Martin (LMT) goes ex-dividend on Monday, with a payout date on June 28.

Cigna (CI) goes ex-dividend on Tuesday. Haliburton (HAL) and H&R Block (HRB) go ex-dividend on Wednesday.

And in the Wall Street Research Corner, Societe Generale says the next commodities trade lies in equities. Analysts recommend going long global mining stocks, which have underperformed a climb in prices for industrials metals.

SocGen also suggested investors buy greenflation stocks, or equities exposed to key metals needed to make the world sustainable as economies address climate change issues.

Demand for industrial metals has contributed to a leap in prices for copper, aluminum and others. Investors also been pouring into Utilities stocks as companies ramp up their use of AI, which requires large amounts of energy to run related data centers.

But global mining stocks over the past 12 months have underperformed energy stocks despite gains for industrials metals, SocGen said.