Deep Dive
Shownotes Transcript
Welcome to Seeking Alpha's Wall Street Brunch, our Sunday look-ahead to this week's market-moving events, along with the weekend's top news and analysis. Hello, today is Sunday, June 29th, and I'm your host, Kim Kahn. It's Jobs Week again, and traders get the number early due to the market holiday for Independence Day. The markets are closed Friday, July 4th, and will close at 1pm on Thursday, the same day payrolls hit before the bell.
Economists expect that June nonfarm payrolls rose by 120,000, with the unemployment rate staying at 4.2% and average hourly earnings up 0.3%.
Wells Fargo economists say, "...the labor market is losing altitude. Although payrolls came in slightly better than expected in May, significant downward revisions to March and April unveiled a softer pace of expansion." "...looking through the household survey's monthly noise, the softening in labor demand will likely keep the unemployment rate inching higher on trend," they added. "...the labor market's gradual loosening has already eased the pressure on employers to hike wages." Also on the economic calendar, the ISM indexes for manufacturing and services are due, as well as factory orders and construction spending.
The earnings calendar remains light, but drinks company Constellation Brands is due to report on Tuesday. EPS is expected to decline to $3.29 on revenue of $2.56 billion. As the company continues to face stagnant growth and tariff headwinds, analysts expect outlook to be weak, with the wine and spirits segment struggling with double-digit revenue declines.
In the bear camp, Seeking Alpha analyst Lucas Saatchi says valuation appears stretched, with an intrinsic value below the current price and negative momentum increasing downside risk, especially before earnings. But SA analyst Jim Sloan is more optimistic, noting that Berkshire Hathaway bought a position in stars in Q4 2024 and doubled it in Q1, seeing a solid value investment cheap because of temporary risks.
Buffett or his lieutenants considered it a good value when buying it up to 10-15% down from the top, then saw nothing in the macro challenges to make them change their mind. Instead, they jumped on a chance to buy 114% more at prices 30% or so lower.
Also on the earnings calendar, Progress Software reports on Monday, joining Consolation Brands on Tuesday are MSC Industrial and the Greenbrier companies. Unifirst weighs in on Wednesday. In the news this weekend, Senate Republicans narrowly cleared a hurdle late Saturday to keep President Trump's ambitious tax and spending package alive, though the razor-thin vote exposed the political headaches that lie ahead for GOP leaders. In a 51-49 vote, most Republicans backed the bill's advancement, while Democrats uniformly opposed it.
Senators Rand Paul, Kentucky Republican, and Tom Tillis, North Carolina Republican, broke with their party, voting no. The bill runs nearly 1,000 pages and remains subject to revisions. Senate leaders hope to pass the legislation by Monday, aligning with Trump's July 4th target to finalize the package.
And the FT reports that executives and board members at Nvidia sold more than a billion dollars of company shares in the past year. A significant portion of those sales occurred in recent weeks as investor excitement over artificial intelligence drove the stock market to record highs.
Roughly $500 million in insider sales took place this month alone as Nvidia's market valuation soared, cementing its position as the world's most valuable company. The surge comes despite recent geopolitical headwinds, including escalating US-China tensions and competition from Chinese AI developers, which should briefly weigh in on the stock.
For income investors, Deere goes ex-dividend on Monday, paying out on August 8th. Heico goes ex-dividend on Tuesday with a July 15th payout date. Cisco and Progressive go ex-dividend on Thursday. Cisco pays out on July 23rd, and Progressive pays out on July 11th. And in the Wall Street Research corner, the S&P 500 is on the cusp of a seventh breakout since 1990, according to B of A, and strategist Michael Hartnett says the breakout has the smallest breakout stock participation.
Within the index, 22 stocks are currently at all-time highs compared to 67 during January 2024's breakout, 54 during August 2020's breakout, 97 during March 2013's breakout, 82 in the breakout of May 2007, 66 during November 1998's, and 51 during February 1991's breakout.
Some of the 22 stocks include Nvidia, Microsoft, Broadcom, IBM, Jabil, Cardinal Health, Take-Two, Philip Morris, Oracle, Amphenol, Netflix, Royal Caribbean, J.P. Morgan, GE, Vinova, and Howe Met Aerospace. In addition, 83 stocks in the S&P 500 are within 5% of their all-time highs, and 146 are within 10%.
That's all for today's Wall Street Brunch. Look for links to stories in the show notes section. Don't forget, these episodes will be up with transcriptions at SeekingAlpha.com slash WSB. And join the elite community of real investors to unearth great investing ideas. Just head to SeekingAlpha.com slash subscriptions.