5 Things You Need to Know to Start Your Day: Americas

Good morning. The tech rally rumbles on, the dollar flirts with its 2024 high and Goldman Sachs says the US jobs market is at an inflection [View in browser]( [Bloomberg]( Good morning. The tech rally rumbles on, the dollar flirts with its 2024 high and Goldman Sachs says the US jobs market is at an inflection point. Here’s what traders are talking about. — [David Goodman]( Want to receive this newsletter in Spanish? [Sign up to get the Five Things: Spanish Edition newsletter](. Stocks rise European stocks rose and US futures were little changed after a rally in large US tech companies [drove Wall Street to another record peak.]( That follows the pattern for much of this year, when big tech has contributed nearly three quarters of the S&P 500’s rally, with Nvidia alone driving 34% of the gains, according to data compiled by Bloomberg. Treasuries were steady after falling Monday amid a flurry of high-grade corporate bond sales that exceeded $21 billion. More gains to come As US equities make new highs, global investors are likely to keep pumping money into the market, [according to a Bank of America survey](. The poll — canvassing 206 participants with $640 billion in assets under management — showed investors remained the most bullish since November 2021, while long bets on the so-called Magnificent Seven technology behemoths now stand at 69% — among the most crowded trades in history, the survey said. How much further can the megacaps take the S&P 500 rally this year? When will US stocks hit a correction and what will cause it? Share your views in the mid-year MLIV Pulse [survey](. Dollar nears high The dollar, meanwhile, is[flirting with a new 2024 high](as elevated US Treasury yields and investors seeking shelter from political uncertainty in Europe flock to the world’s reserve currency. The Bloomberg Dollar Spot Index is a whisker away from levels last seen in November, while the premium paid to hedge against the US currency gaining has risen to the highest level in over a year. Busy day Ahead of Wednesday’s holiday in the US, traders geared up for retail-sales data and a slew of Federal Reserve speakers. At least seven officials are due to speak over the course of the day, and the focus will be on whether softer data in the past couple of weeks has changed the overriding outlook of any voters. Yesterday, Federal Reserve Bank of Philadelphia President Patrick Harker said he [views one interest-rate cut as appropriate]( for this year based on his current forecast, Goldman warning Speaking of softer data, Goldman Sachs economists [say the US labor market stands at an “inflection point”](where any further softness in demand for workers will hit jobs, not just job openings. “Ultimately, the key driver of labor demand is economic activity, and GDP growth has slowed meaningfully,” analyst including Jan Hatzius wrote. So despite the Federal Reserve’s “surprisingly hawkish” projections last week, “we feel good about our forecast of two cuts (in September and December),” they said. What we’ve been reading This is what’s caught our eye over the past 24 hours. - [RBA discussed rate hike](, pledges vigilance on sticky inflation. - Private equity managers [risking capital]( to avoid Labour tax hike. - UniCredit plans risk transfers[tied to €8.5 billion of loans](. - A [deadly mining complex]( is powering carmakers’ green revolution. - China and UK set to see the[most millionaires leave]( in 2024. And finally, here's what Joe’s interested in this morning There are a couple things on my mind this morning. The first is that, as everyone knows, the market rally has been "narrow" with a handful of big tech companies just dramatically outperforming the rest of whatever market index they're in. Here's the Bloomberg "Mag 7" Index (Tesla, Apple, Microsoft, Meta, Nvidia, Google, Amazon) relative to the QQQ (which is already heavily weighted towards these companies). Just extraordinary one-way performance. There are numerous ways to express the same concept, but you get the idea. If you listen to the experts on TV, and just buy an index fund, you probably don't care what's driving up the headline returns of an index. But some people pay attention to this stuff, and if you're an active investor, then really it matters whether you've got the megacap tech call correct. Anyway, one thing that's interesting is that lately, even with these names rallying and the major indexes like the S&P 500 hitting record highs, crypto hasn't been participating. The big cryptocurrencies basically act like tech stocks, and go up and down as risk goes on and off. But anyway, the coins hit a high back in March, and haven't gotten back since. Here's Bitcoin. It's kind of useful, in a way. Cryptocurrencies generally trade like stocks (with way more volatility) but for the moment, they're not trading like The Good Stocks. On a separate note, today is retail sales day. One of the big questions is whether the consumer -- particularly at the low end -- is "tapped out" in some way. Every few months or so, people talk about this, and point to this or that measure of savings having been depleted. And we're in another round of that right now. For example, on its conference call in May, Target talked about how consumers "continue to spend cautiously, particularly in discretionary categories". On Walmart's earnings call, CFO John David Rainey said "many consumer pocketbooks are still stretched and we see the effect of that in our business mix, as they're spending more of their paychecks on non-discretionary categories and less on general merchandise." These days the two big econ events each month are Non-Farm Payrolls and CPI (and also PCE of course). But with the chatter about consumer softening (which makes sense, given the cooling labor market), today's Retail Sales report deserves attention. Economists are expecting a 0.3% headline gain, and a 0.4% gain when you exclude auto and gasoline. Joe Weisenthal is the co-host of Bloomberg’s Odd Lots podcast. Follow him on X [@TheStalwart]( Like Bloomberg's Five Things? [Subscribe for unlimited access]( to trusted, data-based journalism in 120 countries around the world and gain expert analysis from exclusive daily newsletters, The Bloomberg Open and The Bloomberg Close. [Bloomberg Markets Wrap: The latest on what's moving global markets. Tap to read.]( Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. Before it’s here, it’s on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals can’t find anywhere else. [Learn more](. Want to sponsor this newsletter? [Get in touch here](. 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