Note: If you want to understand what’s really going on in America, don’t listen to the politicians. Don’t read the news. Follow the money.
Right now, trillions are being funneled into a specific set of companies… stocks that most investors have never even heard of.
But these companies are quickly becoming critical to a national movement that will reshape America as we know it. Every industry will be impacted. Every facet of our lives.
That’s why our colleague Jeff Brown has been working on this story for months with his long-time friend and forecasting legend Porter Stansberry.
On Wednesday, June 11, at 2 p.m. ET, Porter and Jeff will expose everything – and name two of the stocks that could be next to surge. Don’t miss it: Get your name down for free now.
Since stocks rebounded off their April lows, the market has been climbing a wall of worry. That’s about to intensify as we head into the summer period.
Because a mixed bag of economic data is telling us that the markets are about to face some real tests.
A downturn may sound implausible, given that the S&P 500 hit the 6000 level last week, just below its all-time high.
But the reality is, we just haven’t seen the data reflected in the price action yet. And the markets have shrugged off any bad news that has come their way.
Yet stocks are priced for perfection right now. And with so much uncertainty around, you need to remain cautious…
Anyone Hiring?
Consider the jobs market…
Last week’s Job Openings and Labor Turnover Survey rose to 7.391 million for May. That was above the 7.1 million forecasts and easily beat last month’s 7.2 million.
Nonfarm payrolls came in slightly lower than the previous month. But they still beat estimates and added 139,000 new jobs. And unemployment remained steady at 4.2%.
So on the surface, the job market seems sturdy. But these releases are a lagging indicator. It takes time for any downturn to flow through into the official numbers.
And we may be on the cusp of seeing a change. Early last week, private business job numbers came in at just 37,000. That was well below forecasts of 115,000.
Plus, while there haven’t been mass layoffs, companies aren’t in a rush to replace staff who voluntarily leave. And one company going into downsizing mode can lead to others in the sector following suit.
So I’m staying patient. When the underlying numbers weaken, that eventually finds its way into the headline numbers.
And as the market grinds higher, we’re seeing key sectors head the other way…
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Underlying Uncertainty
One of President Trump’s main goals is for manufacturing to return to the U.S. That’s one big purpose behind his tariffs.
So you might expect manufacturing activity to ramp up… but it’s been heading the other way.
The Institute of Supply Management’s (ISM) Manufacturing data for May showed that manufacturing has been contracting since March and is well down from its January high.
It’s a similar theme in the services sector… The ISM’s Services data contracted in May for the first time since June last year, at 49.9. (Below 50 is contracting; above is expanding.) That was well below the 52 forecast. Plus, the number has been steadily trending lower since reaching 55.8 last October.
That brings us to this week. Looking forward to Friday, we’re awaiting the latest University of Michigan Consumer Sentiment survey. It’s been tracking near three-year lows.
Yet amid these releases, the markets are back within a whisker of all-time highs.
To be clear, I’m not predicting some cataclysmic event. And it’s unclear what catalyst will cause a sell-off.
But I’m urging investors to remain wary. Volatility is tracking back near extreme lows, so it’s easy to become complacent.
We still have no idea how the trade war will play out. We don’t know if major trading partners like China and the European Union even want to come to the negotiating table.
And we still don’t know the real impact of tariffs on inflation. Neither does the Federal Reserve… That’s why we’re unlikely to see any interest rate cuts until at least the end of this year.
So, by all means, enjoy the rally while it lasts. But keep a wary eye out in case something from left field brings things undone.
That means tightly controlling the size and number of your open positions. Always have a clear rationale behind every trade. And make sure you know your exit plan…
Regards,
Larry Benedict
Editor, Trading With Larry Benedict
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