This week

The Colony Club, the Union Club, and the Metropolitan Club, just some of the more exclusive private members hangouts to be found in New York. All located in salubrious Manhattan and with membership waiting lists that can stretch for years, there are few more difficult places in the world to try and gain access to than such retreats. However, there is one club that is even more exclusive, located just a stone’s throw away in New York’s Financial District, allowing only its 5th existing member though its doors this week.

Tuesday saw Nvidia briefly join an elite club of U.S. companies sporting a $1 trillion market value (Apple, Alphabet, Amazon, and Microsoft), as investors piled into the chipmaker that has quickly become one of the biggest winners of the recent Artificial Intelligence boom. The stock has gained about 200% since October 2022, far outpacing any other member of the S&P 500 index. The latest surge furthers a rally from last week, on the back of the company’s revenue forecast that surpassed the average Wall Street estimate by more than 50%, leading some analysts to brand them "unfathomable" and even "cosmological."

Although confidence that Nvidia’s technology can help shape the future seems to be at all-time high, broader economic confidence still seems to be waning, illustrated well by US Consumer Confidence figures, released during the early part of the week. The data showed that confidence amongst Americans fell to a six-month low, with worries about the current state of the labour market and the outlook for business conditions slipping further large due to fears over the US debt ceiling. The index declined to 102.3 in May from an upwardly revised 103.7 for the prior month, with the share of consumers who said jobs were “plentiful” falling to its lowest level in more than two years. The confidence gauge also remains well below pre-pandemic levels, highlighting the growing uncertainty about the economy.

It was very much a sense of “join the club” on Wednesday, as China saw its manufacturing activity fall faster than predicted, with its Purchasing Manager Index (PMI) slipping into contractionary territory, joining a host of other major economies. Slipping to its lowest in five months and below 50 (the marker of contraction and expansion) to 48.8, China’s post pandemic recovery has been patchy at best and was further highlighted by the data that showed imports contracted sharply, property investment slumped, industrial profits plunged and factory output and retail sales both missed forecasts.

Whilst the Union Club, the US’s most expensive private members club, can charge up to $500,000 a year for membership, the fee is nothing compared to the $31.4 trillion debt ceiling that was finally voted through the House of Representatives on Wednesday, by 314-117 votes. The legislation also made it through the Senate the following day, making it to President Joe Biden's desk for signing before the Monday deadline, when the federal government was expected to run out of money to pay its bills. After what had been a difficult start to the week for all major bourses, markets cautiously made their way higher on Thursday and Friday.

From joining clubs to joining the labour force, Friday signalled the release of US Non-Farm Payrolls, detailing the number of Americans starting a new job this month. Coming in at 339,000, much more than the anticipated 193,000, the data will give the US Federal Reserve plenty to think about, with the labour market showing yet more resilience. A crumb of comfort was offered to those hoping for a fall in inflation soon, the unemployment level did rise from 3.5% to 3.7%, perhaps showing a sign of weakness in the world’s largest economy.

Next week

Following a week in which a deal for the US debt ceiling was finally signed off, the coming five days, should hopefully have a slightly lower octane feel to them.

Or perhaps not, as the weekend sees the highly influential OPEC-JMMC meetings take place, a big deal for the oil markets. These meetings will be attended by representatives from all thirteen OPEC members who will this time be joined by another eleven oil rich nations. Set to discuss a range of issues regarding energy markets and most importantly, agree on how much oil they will produce, which will impact prices at the pumps. The meetings are closed to the press, but officials usually talk with reporters throughout the day and a formal statement covering policy shifts and meeting objectives is released after the meetings have concluded.

With the domestic consumer apparently running on empty, combatting inflation, which is still the highest in the western world, British Retail Sales data should make for interesting reading. Although the consumer continues to spend, it is interesting to see the patterns of items being bought, the upcoming data should reaffirm that Brits are putting off purchasing big tickets items and switching more to own brand labels, themes that have been emerging over the last year or so.

Attention should switch to across the pond during the second half of the week as the US releases its Unemployment claims data. A major thorn in the Federal Reserve’s side, the US labour market continues to be resilient, forcing the central bank to consider further rate rises to quell inflation. Thursday’s numbers, detailing the number of individuals who filed for unemployment insurance for the first time during the past week, will be scrutinised carefully for any signs that more Americans are signing on, showing that the Fed’s recent rate hikes are beginning to have an impact on company hiring numbers.

The information in this blog or any response to comments should not be regarded as financial advice. If you are unsure of any of the terminology used, you should seek financial advice. Remember that the value of investments can go down as well as up, and could be worth less than what was paid in. The information is based on our understanding as at 02 June 2023.