June Brings Return of Optimism  

June 7, 2024

Here are the economic and market highlights for the week: 

  • Nonfarm payrolls increased 272K in May, topping estimates of 190K and April’s 175K. Despite the job gains, the unemployment rate rose to 4%, the first time it has breached that level since January 2022. The increase was driven by a full percentage point decline in employment for workers aged 24 and under. Seasonal factors, however, were also at play as May is graduation month for colleges. Analysts expect the jobless rate to normalize as soon as next month with the unemployment rate falling back to 3.90%. Average hourly earnings came in hot, however, rising 0.40% for the month and 4.10% from the year ago period. Consistent with recent trends, job gains were concentrated in healthcare, government, and hospitality.

  • The manufacturing renaissance sputtered in May as companies reassessed their investment plans for 2H 2024 amid high interest rates. The ISM Manufacturing Index fell to 48.7 from 49.2 in April. Numbers below 50 indicate contraction. The new orders gauge fell to a one-year low of 45.4 while the production index dipped 1.1 points to 50.2. The price index, a measure of inflation, slid 3.9 points to 57. Despite the slide, businesses continue to experience elevated prices for raw materials such as oil, plastics, copper, and aluminum. That will continue to put upward pressure on prices for goods.

  • U.S. services came roaring back in May after a weak April showing. The ISM Services Index jumped to 53.8 from 49.4 the previous month. That was well above analysts’ estimates of 50.7 and above 50 which indicate expansion. New orders rose to 54.1 in May from 52.2 the prior month. Meanwhile, exports surged to 61.8 from a weak 47.9 reading in April. The price index cooled slightly to 58.1 from 59.1 in April but it still suggests upward pressure on services prices remains steady. Strong order growth should keep the services sector expanding in 2H 2024.

June Brings Return of Optimism

After a sluggish end to May’s trading, stocks bounced back strongly in the first trading week of June on renewed hopes for rate cuts in the back half of the year. A weaker manufacturing report kicked off the week, sparking bullish bets for a Fed pivot, but those hopes were tempered by week’s end once May’s stronger-than-expected, nonfarm payrolls report was released. While the headline hiring and wage growth figures were strong, other indicators such as the uptick in initial jobless claims and the overall rise in the unemployment rate are showing a degree of softening. This mixed, but entirely acceptable, slowing of demand was reflected in the manufacturing PMI as well. The ISM surveys purchasing managers monthly and contained within the PMI release is not only the quantitative composite measure, but also the qualitative quotes from the survey’s respondents. Reading the quotes, the impression is that there remain pockets of strength within the economy but that industry overall is experiencing a downshift in consumption. This is the economic backdrop the Federal Reserve will weigh as it gears up for next week’s FOMC meeting. Data continues to hold up strong, but softening indicators are emerging. Traders are currently pricing in a 50-50 chance of a September rate cut, which are better odds than the data probably justifies. This week’s rate cuts by the European Central Bank and Bank of Canada may be factoring into the optimistic odds making. The ECB lowered rates for the first time in five years on Thursday, bringing its benchmark rate to 3.75% while Canada cut their benchmark rate to 4.75% on Wednesday. Market observers were quick to qualify these rate reductions as “hawkish cuts”, with the central banks wanting to be accommodative to decelerating data but emphasize their willingness to hike if necessary. The Fed is walking a similar tight rope in wanting to support the economy without re-igniting inflation. The challenge the Fed has is that it is working with a much stronger economy than either Europe or Canada.

The Week Ahead

Next week, we will take a look at the following data: 

  • FOMC Meeting
  • CPI Index
  • PPI Index


80 Years Later: Honoring the Heroes of the Greatest Generation

Yesterday marked the 80th anniversary of D-Day, the June 6, 1944 invasion by Allied troops on the beaches of Normandy in northern France. Historians regard D-Day as one of the most ambitious and consequential war campaigns in history. It changed the course of World War II and is one of the greatest military achievements ever accomplished, encompassing a coordinated air, naval, and land assault and marking the beginning of the liberation of Western Europe from Nazi occupation. 

Since the 1930s, Nazi Germany had been invading and expanding its territories across Europe, and after almost five years of war, nearly all of Western Europe was occupied, leaving Great Britain as the only major European power left standing.  

The U.S., Great Britain, and the Soviet Union joined together, pledging to defeat the Axis Powers and stop Hitler. Allied military leaders believed that a full-scale invasion of Western Europe would spread the German army thin and turn the tide of the war. Hitler was aware of this possibility and constructed an “Atlantic Wall” defense system with 2,400 miles of fortified bunkers, landmines, and beach and water obstacles along the coast of Europe. 

In the months leading up to D-Day, the Allies carried out a massive deception operation to mislead Germany about the location of the planned invasion while they began amassing troops, ships, tanks, planes, gliders, and other war apparatus across the English Channel.

Normandy was selected as the location for the attack because it was believed to be less heavily defended. Shortly after midnight on June 6th, 1944, thousands of Allied aircraft began bombing German defenses and other targets at five beachheads along a 50-mile stretch of coastline while paratroopers and gliders dropped behind enemy lines to destroy bridges and prevent German reinforcements. Despite rough seas, chaotic beach landings, and strong Nazi resistance, soldiers charged head on into German gunfire, landmines, and barbed wire. The Allied troops dug in, pushed forward against steep odds, and ultimately achieve their objective.

Less than a week later, the beaches were fully secured, and the liberating armies began moving inland and taking territory back from Nazi Germany. By the end of August 1944, the Allies had liberated Paris, and the Germans had been removed from northwestern France. The Allied forces then prepared to enter Germany, where they would meet up with Soviet troops moving in from the east.

More than 4,000 Allied troops lost their lives in the D-Day invasion and more than 5,000 were wounded. In the ensuing Battle of Normandy that continued from D-Day until August 21, 1944, 70,000 Allied forces were killed, and 153,000 wounded. In retrospect, the sheer magnitude of challenge and the degree of sacrifice born by the “Greatest Generation” is hardly imaginable, and in honor of their courage and their fortitude, we can only express our deepest gratitude.

Below is the storied message delivered by General Eisenhower, who helped orchestrate the D-Day plan, to troops on the eve of the invasion as they boarded ships and planes and prepared for combat.    


Soldiers, Sailors, and Airmen of the Allied Expeditionary Force!

You are about to embark upon the Great Crusade, toward which we have striven these many months. The eyes of the world are upon you. The hope and prayers of liberty-loving people everywhere march with you. In company with our brave Allies and brothers-in-arms on other Fronts, you will bring about the destruction of the German war machine, the elimination of Nazi tyranny over the oppressed peoples of Europe, and security for ourselves in a free world.

Your task will not be an easy one. Your enemy is well trained, well equipped and battle-hardened. He will fight savagely.

But this is the year 1944! Much has happened since the Nazi triumphs of 1940-41. The United Nations have inflicted upon the Germans great defeats, in open battle, man-to-man. Our air offensive has seriously reduced their strength in the air and their capacity to wage war on the ground. Our Home Fronts have given us an overwhelming superiority in weapons and munitions of war, and placed at our disposal great reserves of trained fighting men. The tide has turned! The free men of the world are marching together to Victory!

I have full confidence in your courage, devotion to duty and skill in battle. We will accept nothing less than full Victory!

Good luck! And let us beseech the blessing of Almighty God upon this great and noble undertaking.


















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