👷🏽‍♂️ Is The US Labor Market Cooling Off?

Good morning. US stock futures moved higher in Thursday morning trading as market indices closed at record highs.

👨🏽‍💼 US job market shows signs of slowing

📝 Our report: The pay gap between job stayers and job changers shrank in May, a sign that the U.S. labor market is cooling off from its sizzling start to 2024. Newly released data from ADP showed that the median year-over-year pay increase for job switchers fell to 7.8% in May, from a recent spike of 8.3% in March and 8% in April.

 🔑 Key points:

• "We've seen that people's willingness to jump from job to job has really declined over the last two years," ADP chief economist Nela Richardson said on a conference call with reporters.

• The new dynamic is playing out as recently releases data from the Bureau of Labor Statistics also showed job openings hit their lowest level in more than three years in April.

• In April, the US economy added 175,000 jobs while the unemployment rate ticked up by 0.1% to 3.9%.

💡 So what: The cooling of the U.S. labor market implies a slowdown in job growth and wage increases, which can signal a potential easing of inflation pressures. This may lead to a more stable economic environment, reducing the need for aggressive interest rate hikes by the Federal Reserve. However, it could also result in decreased consumer spending and slower economic growth, potentially increasing concerns about a recession. Employers might gain more bargaining power over wages, making it tougher for job seekers to negotiate higher pay or switch jobs for better offers.

Thursday - No Major Economic News

Friday - Consumer Credit, US Unemployment Rate

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🤖 Newest member of the $3 trillion market cap club

WHAT: Nvidia’s stock soared to a record high, giving the company a market cap over $3 trillion and making it the third to join the trillion-dollar club, alongside Apple and Microsoft. Tech behemoths including Amazon, Google, Meta, Microsoft, Tesla, and others use its hardware to power everything from their cloud-based AI offerings for customers to their own AI models and services.

WHY: Nvidia has been the poster child for investor enthusiasm in AI, which accelerated with OpenAI's release of ChatGPT in late 2022. The stock is up over 140% this year and 200% over the last year.

🫷🏽 US court strikes down hedge fund disclosure rule

WHAT: A federal appeals court nixed the US Securities and Exchange Commission's (SEC) rules demanding hedge funds and private equity firms disclose quarterly fees and expenses to investors, dealing a major blow to the regulator’s crackdown on the private-funds industry. A three-judge panel of the US 5th Circuit Court of Appeals in New Orleans sided with industry groups, who argued that the agency overstepped its authority and that rules weren’t necessary for the “highly sophisticated” investors that pour money into private funds.

WHY: The regulations were just one of several rules that Wall Street’s main watchdog has been seeking to impose on hedge funds and private equity firms. SEC Chair Gary Gensler has prioritized clamping down on the $26 trillion market, which he says lacks transparency and can contribute to financial stability risks.

🦾 UK regulator holds hand on AI rules

WHAT: The UK's Financial Conduct Authority (FCA) announced it won't be in a hurry to draft detailed regulations for the fast-evolving use of artificial intelligence in financial services. "We are not at the moment inclined to just jump in and write lots of detailed rules," FCA CEO Nikhil Rathi told an event held by trade body the Investment Association.

WHY: Use of AI in financial services is predicted to add 35 billion pounds ($44.68 billion) in revenue for UK firms over the next five years, according to a survey by the City of London Corporation and KPMG published recently.

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